After the Fannie Mae Gobble Up

Run, Run, Run,
Let's Have a lot of fun.

Kansas Bankers Surety Corp., of W Buffet's Berk. Hath. has terminated its "excess deposit insurance" plan by which it insured bank deposits above $100,000. It seems Buffett fears 1,500 U.S. banks failing in the near future. And there are fourteen U.S. regional banks, that have at least 5% of whose core capital was now-worthless stock of Fannie Mae and Freddie Mac; and Lehman is near the end after it reported a $3.9 billion second-quarter loss and started setting up a separate unit to try to auction off $30 billion in commercial mortgage-backed securities. The amount reminds a lot of Bear Stearns, and the sell off of Merrill Lynch of MBS at 20 cents on the dollar--after having to loan the buyer the money, so it's said.

Rumors say the likely "receiving bank" for the remnants of Lemon Brothers is Morgan Stanley, and the next step is Davey Jones' Locker. Washington Mutual, the country's biggest S&L with over $250 billion in deposits and a totally toxic book of mortgage "assets," was placed on probation by the Office of Thrift Supervision. With American voters waking up to the fact that trillions of their tax money has just been pledged by Treasury Secretary Hank Paulson, bank runs are on the way.