Home Front

A blog about the economy and the Sacramento-area real estate market.

September 14, 2008
Lehman's ship, floated on risky mortgages, is going down

Three years after Sacramento became one of the first cities in America to see its real estate market sliding back down the hill, one of the first metros to tell the investment world that all had gone way, way too far this time, the Wall Street fallout is worsening. 

Weekend efforts to save Lehman Brothers - brought down by its investments in mortgages gone bad - have apparently failed.

 Bank of America is going to buy investment bank Merrill Lynch for $44 billion, Washington Mutual's problems are still out there and the stock market may get walloped again Monday.

 Did the Wall Street crowd get this housing boom all wrong or what?

Here's a quite unnerving prediction in the above story:

"Christopher Whalen, managing director of Institutional Risk Analytics, a research firm, predicts that approximately 110 banks with $850 billion in assets could close by next July. That's out of 8,400 federally insured institutions, he said, which together hold $13 trillion in assets."

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