Bank officials in SF to discuss economy

March 11, 2008 6:47:42 PM PDT
Officials from some of the west coast's largest banks met in San Francisco on Tuesday morning to discuss the affect the slowing economy is having on their bottom lines. Those banks say a rebound will depend on what happens in the mortgage sector.

These banks are losing money and some admit they're losing millions of dollars, all because of this mortgage mess. While some lenders are already starting to alter their practices on how they lend out money, others who are dealing heavily with the sub-prime lenders may already be too late.

Everywhere you look it seems like home prices are falling, but it is still not enough, according to one banking analyst, to fix the mortgage crisis.

"Home prices have to adjust even more downward because the relationship between people's earnings and the home prices are still out of kilt," says analyst Les Muranyi.

Les Muranyi travels the country. His job is to rate the performance of banks. He has his own take on the current FBI investigation with Countrywide on possible securities fraud.

"I don't think the investigations will be limited to Countrywide bank. I think banks heavily involved in sub prime lending will be reviewed and investigated," says Muranyi.

What went wrong, Muranyi claims, is money hungry investors combined with eager lenders.

"It's the greed factor. Prices are going up and theyride that wave. So, wishful thinking that earnings will go up."

Despite the dark predictions, one of the world's largest banks, Wells Fargo, claims it is still loaning money out for homes, but restrictions are tight and it added business with subprime lenders last June.

"The problems are likely to get worse as time goes on. There are a lot of issues that drive that. One is the economy sliding towards a recession with a distant possibility of a depression," says Muranyi.

Wells Fargo did admit it is not immune problems of the mortgage mess. The bank admitted that out of its $22 billion dollar loan portfolio, it lost $18 million dollars last year.


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