150 US banks to collapse: Dave Rove at Ladenburg Thalmann
According to Dave Rove, analyst with Ladenburg Thalmann, at least 150 US banks could collapse over the next two years.
At present, there are over 7500 regional and national banks based within the United States.
However, Mr Rove is at pains to suggest that this figure is far smaller than the 1000 or so banks that went bust during the 80′s and 90′s.
In a report entitled “Who is next?” he produced two ratios, which indicated the percentage of non-performing assets compared to loans outstanding, and capital defined as common equity plus reserves.
In short, he looked closely at liabilities vs assets and came up with two different methods to highlight which banks may have the least secure future.
Seven banks came into a designated danger zone under both systems.
These were:
- Downey Financial,
- Corus Bankshares,
- Doral Financial,
- FirstFed Financial,
- Oriental Financial,
- Bell Financial Group,
- BankUnited Financial.
Dave Rove also found Washington Mutual (WM) was nearing the edge of the danger zone in at least one analysis.
Despite speculation, Mr Rove denied that National City (NCC), or First Horizon (FHN), were in danger through his analysis.
Earlier this month Mr Rove had railed at the Wachovia Corporation for what he claimed was an inability to rebuild a serious banking model, and instead that the company should hire Phil Purcell, formerly CEO of Morgan Stanley, to get WC back into shape.
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