Berkeley CSUA MOTD:Entry 52073
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2025/07/09 [General] UID:1000 Activity:popular
7/9     

2008/11/21-28 [Finance/Investment] UID:52073 Activity:nil
11/21   E*Trade survival depends on TARP funding.  Larger brokerages reluctant
        to acquire company because of its MBS/CDO liabilities (would rather
        acquire brokerage side only via bankruptcy).
        http://www.reuters.com/article/ousiv/idUSTRE4AK6NM20081121?sp=true
        \_ If my online tradng account is with ETrade, how will this
           affect me?  Should I transfer ASAP?  Any recommendations?
           I make ~10-20 trades a year at most.
           \_ your immediate concern is articles like this leading to a
              stampede for the door and contributing to a chaotic closure.
              What do I think?  I would close my account today and not take
              no for an answer.  The second this appears as a lead story on
              http://CNN.com you may be in for a very long wait on the phone. -op
           \_ You are covered for up to $1/2M by the Federal Govt, so if you
              have less than this, your biggest inconvenience might be having
              to wait a few months while your claim is processed. If you have
              more than this, you should move some to another brokerage.
              \_ My wife was in the Reserve Primary Fund in her 401(k), they've
                 gotten back 75%, but it's a waiting game while they try to
                 extract funds from the govt and figure out how to liquidate.
                 *Your* nightmare is if your stock portfolio is frozen, the
                 markets are crashing around you, and you can't do shit.  All
                 that SIPC covers is return of stock, not value of stock when
                 a brokerage goes boom.  Cash should be safe, though, up to
                 the insured amount. -op

                 \_ Not a nightmare if you are a buy and hold investor. But
                    if you want to be able to trade in and out of the market,
                    this could be problematic.
        \_ Thanks.  Any recommendation where to move to for online trading?
           I only keep $50-$100k for a situation like this.  Most of my
           money I have with my brick and mortar bank and the financial
           services compnay which manager our defined contribution retirement
           plan.  But I do want access to a way to trade online with low fees.
           \_ People seem to like Scottrade, though if you are into daytrading
              you can use http://thinkorswim.com like angry sysadmin.
        \_ fyi, this showed up on drudge just now, not highlighted though
2025/07/09 [General] UID:1000 Activity:popular
7/9     

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www.reuters.com/article/ousiv/idUSTRE4AK6NM20081121?sp=true
Stock Buzz) have worsened and now hinge on whether it can secure US government funds that would bring some relief to its book of bad mortgage loans. Shares of the discount brokerage tumbled below $1 to its lowest price ever this week, indicating that investors think chances are slim it will secure the $800 million it applied for under the Troubled Asset Relief Program (TARP) rescue program. Stock Buzz), have said they are loath to bid for the smaller and now very cheap company, but have made no secret they covet E*Trade's brokerage business, which has kept it afloat despite the drag of its mortgage business. Roger Freeman, a Barclays Capital analyst attending a business update hosted by Schwab this week, said E*Trade's existence "depends on whether it gets the TARP." E*Trade's survival probably hinges more on whether its customers continue to drive growth, according to analysts. But after a string of quarterly losses, the TARP funding is vital for the near term. But there are serious doubts the company will qualify alongside larger banks whose collapse could further shake a weakened US economy. "The way the stock is trading now, it appears as though a lot of investors don't expect them to get the TARP funding," said one analyst, who did not want to be named due to E*Trade's delicate situation. E*Trade Bank offers credit cards, savings and checking accounts, and mortgage and home equity loans and hash about $28 billion in deposits. The purpose of the government's TARP program is to capitalize struggling financial institutions so they can resume lending. Some analysts said it is unlikely that E*Trade, in crisis mode, will be able to lend. "Inherently, it seems to go against the spirit of the TARP program," the analyst said of E*Trade's application. The company's argument for public funds focuses on the fact that TARP is partly intended to support those institutions that facilitate liquidity in the market. E*Trade has said it is confident it will secure the funding and expects to make an announcement later this month. The company has $665 million in cash available to increase the capital of its banking arm if necessary. Last month, E*Trade's daily trading and new client accounts both jumped from September, due largely to the volatile market selloff. "Customers have been consistently supportive of our business," said company spokeswoman Pam Erickson. WORST-CASE SCENARIO Overall, discount brokers are enjoying a spike in trading revenues, but they face the worst-case prospect of a lengthy bear market during which individual investors could exit in droves. "Despite the reasonably healthy trends in the core brokerage franchise, we believe continued credit headwinds, a lack of earnings visibility and a limited capital cushion for common shareholders gives us no reason to become more constructive on E*Trade shares at current levels," Credit Suisse analyst Howard Chen wrote to clients this week. The analyst added that because few details on the TARP application have been provided, he has not factored that into earnings estimates. The company spokeswoman declined to comment on the stock price. E*Trade has absorbed a series of price and ratings downgrades since the last quarterly update, when it boosted its provision for loan losses by 62 percent and warned that charges in its home equity portfolio would be higher than expected. TELEBANC ACQUISITION E*Trade, a high flyer in the 1990s technology boom, entered the mortgage business with its 2000 acquisition of Internet bank Telebanc. 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