Honest meaning, the ones that aren't doing things illegal and getting in way over their heads (like an Enron, for example). I just can't recall ever hearing about a bank or insurance company having to shut it's doors. Mergers seem to happen often, where some people lose their jobs, but nothing like the textile industry or any other industry that where competition will eventually drive the weak out.

Like the oil companies, even with rising interest rates over the past year (unfavorable to banks) many of them are still reporting making hefty profits.

I wish I were an economist, not an engineer.

3/22/2006 11:04:23 AM

when banks and insurers get vulnerable they get bought out and merged

3/22/2006 11:07:20 AM

The ones you've heard of don't generally. That's because they're giant corporations. Smaller ones get absorbed just before bankruptcy a lot though.

3/22/2006 11:37:02 AM

Quote :

"Do "honest" banks or insurers ever go bankrupt?"

They can, but there are many systems working to prevent such an eventuality, as noted above.

Quote :

"even with rising interest rates over the past year (unfavorable to banks)"

Says who? A bank is a source for capital. As interest rates rise, that capital can be loaned out at higher interest rates, dramatically increasing profits. The only way it could hurt a bank is if it was a net debtor (how?) or if it increased the rate of default for the bank's borrowers, which is far more dependent upon general economic conditions which thanks to the Fed are usually favorable during times of high interest rates.

Back in the days before the Federal Reserve, interest rates would rise in times of recession and fall in times of prosperity (to cover a perceived higher risk of default). Today, interest rates are far more dependent upon the bottomless pit of the printing presses at the Treasury Department which tend to drive down interest rates during recession and allow them to float up during prosperity.

As per the original question, it is only "normal" for banks to go bankrupt during times of monetary collapse when alternative means of exit such as mergers are either flooded or hindered.

3/22/2006 12:42:06 PM

You need a better example. Enron was neither a bank nor an insurer.

3/22/2006 6:48:40 PM

Banking and insurance is based on math. Unless there's a miscalculation, fuck-up, or disaster, it's pretty unlikely it'll just fail.

3/22/2006 8:51:24 PM

Quote :

"You need a better example. Enron was neither a bank nor an insurer. "

Really? So you are saying you see no parallels between an Enron and a Fannie Mae, for instance?

3/22/2006 9:16:12 PM

^^also, insurers are insured, so not only would it take a highly improbably disaster, it would take an improbably series of improbably disasters.

3/22/2006 9:29:29 PM

Not to mention that they have Jews on payroll to keep shit on lockdown.

We don't fuck around with money.

3/22/2006 9:35:20 PM

^^^very few similarities.

3/22/2006 10:00:21 PM

Quote :

"Really? So you are saying you see no parallels between an Enron and a Fannie Mae, for instance?"

No.

I'm saying Enron was neither a bank nor an insurer.

3/22/2006 10:41:16 PM

This was how "Enron" was used as the example

Quote :

"Honest meaning, the ones that aren't doing things illegally and getting in way over their heads (like an Enron, for example)"

Which follows

"honest"

3/22/2006 11:20:45 PM

Enron's finances were not as horrible as people make it out to be. Yes, they lost most of the money, the stock price needed to fall about half. However, no company can survive such extreme scandal. Since some of the books were cooked, investors didn't trust any of them, so no price was low enough. The company had no choice but to fold.

Moral of the story: The market tends to over-punish those that lose its trust. Don't be one of those people.

3/23/2006 12:16:23 AM

LoneSnark. You are the devil.

Quote :

"Enron's finances were not as horrible as people make it out to be. Yes, they lost most of the money, the stock price needed to fall about half. However, no company can survive such extreme scandal. Since some of the books were cooked, investors didn't trust any of them, so no price was low enough. The company had no choice but to fold. Moral of the story: The market tends to over-punish those that lose its trust. Don't be one of those people."

DEVIL!

[Edited on March 23, 2006 at 1:12 AM. Reason : ]

3/23/2006 12:50:23 AM

And what did "the ones" mean?

3/23/2006 11:48:34 AM