I'm watching a bank being forced into a run

[peternap]

I've been watching National City Bank stock all day. The rumor mill started and down went the stock. It was down about 30% when I started writing this. As far as I can find there is NO NEWS TO MERIT THIS. They are being forced down.

Trading was halted for a while. The bank issued a statment saying there was no problem and still it's selling off. I'm not buying right now but if it hits 2.90, I'm going to get a few thousand shares.

This is unfortunately how the market is working ....where the hell is the SEC?

[muldoon]

Both Wamu and NCC are in a run to the bottom today.  Other CA heavy banks like DSL and FED are as well.  It's also a reaction to the IMB disaster, who failed over the weekend with the exact same problems.  Both NCC and WM trading in the 3.50 range now, off ~25-30% each.  I don't think it's rumor milling, I think they are simply breaking down due to rescinding credit lines, deflating assets, and no velocity or liquidity in level3 assets.  As money gets more expensive to borrow, and tougher to find, these companies that lived off the float will have a tougher and tougher time staying in business.  The cost of money will only go up because risk is not being removed, it is being hidden and lied about.  I wouldn't take a financial equity position here at all.  The fireworks are not done yet in my opinion.  It took people awhile, but now their scared - and looking for the exit.   

As for ncc dropping on no merit, I think this is relevant.
http://www.marketwatch.com/news/story/national-city-sets-date-special/story.aspx?guid={47516D34-6C4E-4A07-96C1-FACD04520C6F}&dist=hppr

They called a special stockholders meeting for next Monday (they release numbers on Tuesday),

"At the special meeting, holders of shares of National City's common stock will be asked to consider and vote on proposals to approve (i) the increase of the number of authorized shares of its common stock to permit the conversion and exercise of the preferred stock and warrants and make available shares for other purposes and (ii) the conversion of the preferred stock into common stock and the exercise of the warrants to purchase common stock, in each case issued to investors in the equity investment transactions referred to above, as well as other potential equity issuances contemplated by agreements relating to such equity investment transactions. "

The stockholders are telling management what they think of the deal. 

[ScottA]

I'm getting all my cash out of WM today. I don't belive this. Looks like the begining of the end.

[peternap]

They called a special stockholders meeting for next Monday (they release numbers on Tuesday),

"At the special meeting, holders of shares of National City's common stock will be asked to consider and vote on proposals to approve (i) the increase of the number of authorized shares of its common stock to permit the conversion and exercise of the preferred stock and warrants and make available shares for other purposes and (ii) the conversion of the preferred stock into common stock and the exercise of the warrants to purchase common stock, in each case issued to investors in the equity investment transactions referred to above, as well as other potential equity issuances contemplated by agreements relating to such equity investment transactions. "

The stockholders are telling management what they think of the deal. 

I saw that after they broke below 3.00 and I started really thinking about a buy. Doesn't matter though, in the meantime, Cramer called it a buy so I dropped the idea (watch TV and lose your ass).

I didn't look at the Reg Show but it sure looks like a hedge short. Another falling star.....$33.00 to $2.99.

[peternap]

I'm getting all my cash out of WM today. I don't belive this. Looks like the begining of the end.

Scott, the end began a long time ago.....They just didn't tell anyone

[desdawg]

This article is predicting gloom and doom everywhere in the near future touching on Chase, Wells Fargo & B of A when their earning reports comeout:
http://money.cnn.com/2008/07/14/news/companies/bank_earnings/index.htm?section=money_markets
The press will speed things along to the best of their ability I am sure. Trouble is people respond to that. Here we are doing it now. If you go to a small local bank I am not sure but what they aren't tied into the bigger picture as well. Probably are.

[muldoon]

Another thing that also might be a factor here is this AP piece I found interesting, essentially the jist is that the government will no longer help struggling finance companies and instead have vowed to attempt to hold the GSE's.  Looks likes there is not enough money to bail everyone out and that's becoming crystal clear.  I can see financials getting hammered hard on this because that backstop has been perceived for some time. 

http://ap.google.com/article/ALeqM5hPvPP4X0bpZtfr4vVzZmX_P2VN1wD91TDH8O0

By JOE BEL BRUNO and STEPHEN BERNARD
The Associated Press

NEW YORK | The U.S. government is signaling that it won't throw a lifeline to struggling financial companies — except for mortgage linchpins Fannie Mae and Freddie Mac — marking a shift to a new and potentially more volatile phase of the credit crisis....

[desdawg]

Maybe by tomorrow there will be a new and better press release like Fannie and Freddie are being bailed by a bank in Hong Kong and the world will be a shinier place.

[ScottA]

Still waiting for WM to transfer my money. They are moving real slow today.

[peternap]

Des...... shoulda. coulda, woulda is a dangerous way to think. Just to satisfy your curiosity, if you had any, as to why I would buy a troubled stock. It looked like it would bounce and I would have made about $2000.00 even if I had bought at $2.99.

I hate daytrading though and I never look back!

[desdawg]

See, here it is now. I feel better already:
http://money.cnn.com/2008/07/14/news/companies/bank_failures/index.htm?section=money_markets

[benevolance]

This is why none of my money is in the stockmarket... 2 houses, land... machinery and some old cars... No stocks...And if we ever get the houses finished...we have talked about opening a farmer's market/ restaurant/ general store....But no stocks

[muldoon]

I've been watching National City Bank stock all day. The rumor mill started and down went the stock. It was down about 30% when I started writing this. As far as I can find there is NO NEWS TO MERIT THIS. They are being forced down.

Trading was halted for a while. The bank issued a statment saying there was no problem and still it's selling off. I'm not buying right now but if it hits 2.90, I'm going to get a few thousand shares.

This is unfortunately how the market is working ....where the hell is the SEC?

Turns out NCC was walking dead afterall.  I guess the market was right.  SEC need not apply.

http://www.marketwatch.com/news/story/fitch-pnc-financialnational-city-transaction/story.aspx?guid={FADEDF54-F904-4C29-B25B-1F1C878D37C3}&dist=hppr

[Squirl]

Maybe the SEC is needed after all.  If the bank was the walking dead and there were no outside signs, someone with insider knowledge could have triggered the selloff.  Or could have started it to make it an easier aquasition.

[muldoon]

Maybe the SEC is needed after all.  If the bank was the walking dead and there were no outside signs, someone with insider knowledge could have triggered the selloff.  Or could have started it to make it an easier aquasition.

Squirl, I agree.  I dont mean to imply that the SEC should not look into those possibilities; I am referring back in time a few months to the perception that "shorts" were causing "sound" banks to fail.  A few months ago many of the regionals like NCC, DSL, FED and others began tanking  in equity markets and the likes of CNBC and Cramer yelled that the shorts were to blame.  The fact is that anyone who could read a 10k could see the writing on the wall and foresee the troubles coming.  Thus it made a hell of a lot of sense to short the everliving hell out of these stocks.  My comment that SEC need not apply relates to the fact that indeed that market was right and that credit worsening conditions caused these banks like NCC to fail, and not the shorts.  These banks were walking dead then, and some people who were able to see the situation  chose to capitalize on it; they were not the reason the stock fell. The stock fell because the company in question was insolvent, which is now coming to light with the current news story.  Simply put, us shorts were RIGHT to short them as indeed they were fraudulent and busted.  SEC investigations into shorts driving down the stock valuations of sound  companies is bogus because the fact is these regionals were not sound after all.  Thats the point I wanted to make.   

[Squirl]

I agree.  It was a change of market risk.  If doing comparables analysis, if an entire industry spikes in risk, that is going to push prices down for anyone in that industry.  The analysts are part of the same system.  None of them or anyone else in that industry would benefit by acknowledging their industry has become a more risky investment.  The problem is the institutional investors would be happy to cannabalize the banks or each other for gain, hence the shorting.

[Sassy]

http://www.larouchepub.com/pr/2008/081026morgan_lies_tarp.html

[ScottA]

That's what they want you to think. The bailout was really so the banks could afford to give their execs a proper christmas bonus. That's right i said christmas bonus not holiday bonus.