WaMu And Wachovia Weren't On Texas-Ratio Deathwatch List

Back in July, after IndyMac went under, we posted a list of ten banks that could be “the next to go under.” Interestingly enough, as reader Irene noticed, neither Washington Mutual or Wachovia, two major, sub-prime mortgage saddled, banks that got taken over recently, made the list. The list was based on analyzing the banks’ “Texas-Ratio,” basically the ratio of loans they’ve made to capital they had on hand. None of the banks on the Texas-Ratio watch list, like “The State Bank of Lebo” of Lebo, KS, or “First Priority Bank” of Bradenton, FL, can be found on another list either: the list of banks you’ve heard talked about in the news. Well here’s a newsflash that the media elite passed over while buffing their loafers with their fancy college degrees: The State Bank of Lebo now has an ATM. It’s inside Casey’s General Store. Put that in your pipe and smoke it!

PREVIOUSLY: 10 Banks That Could Be Next To Go Under (Photo: knightraven)


Edit Your Comment

  1. blackmage439 says:

    So, essentially long-standing metrics are meaningless, and reality itself is being unmade? I’m blaming the Collider.

    I just hope National City doesn’t fail. I’m in the process of moving my accounts over to there! I swear if they’re bought-out by Citi, I’m closing my NC accounts that day.

  2. sir_pantsalot says:

    Is the WaMu guy celebrating not being on the Texas-Ratio list by drinking Shiner Bock a Texas beer? Come on kid if you want a good Texas bock you have to go with Ziegenbock.

    • palookapalooza says:

      @sir_pantsalot: What, an Anheuser-Busch beer that was created about 15 years ago so they could have a “local” presence instead of one that has actually been brewed in Texas for about a hundred years? C’mon!

      Besides, Ziegenbock tastes like soap.

  3. perruptor says:

    Apparently, the Texas-Ratio calculation is worthless. Where can I buy some?

  4. azntg says:

    It’s almost always the one we LEAST suspect that blows up on us, isn’t it?

  5. Truthie says:

    I am not surprised. The failure of WaMu was precipitated not by a long-standing capitalization issue (although their balance sheet was not in the best shape, it wasn’t on death’s door either). They were sunk by a good old fashioned bank run which caused them to become decapitalized extremely rapidly. I should point out that posts on sites such as Consumerist may have contributed to this situation.

    Then once WaMu fell, the market — like a swarm of financial locusts, if you will — figured Wachovia was the next shoe to drop after it’s horrendously awful acquisition of Golden West. Once that expectation was set it was almost impossible to stop.

    • Rectilinear Propagation says:

      I should point out that posts on sites such as Consumerist may have contributed to this situation.
      @truthie: Consumerist readers know better.

    • B says:

      @truthie: Actually they were sunk by the large number of bad loans they gave out. Unfortunately the Texas ratio doesn’t look at the health of the loans, it just assumes all loans have an equal chance of going into foreclosure.

  6. grandzu says:

    WaMu, however, was on Bove’s “Who Is Next?” report which detailed the high percentage of nonperforming loans.

  7. TechnoDestructo says:

    Let me guess: Mortgage-backed securities were being counted as part of the “capital they had on hand,” driving down the ratio.

  8. BankOnIt says:

    First Priority Bank in Bradenton, FL can be found on another list too – the FDIC’s list of institutions that have failed thus far in 2008.