bank rates

Downey Savings Showing Signs of Trouble

Bankaholic reader Doug M. emailed me to tip me off on a white-hot 4.60% APY 18-month CD at Downey Savings.

After doing some research on this bank, there are some reasons that this bank may be in trouble.

  • Banks that offer unusually high deposit rates are desperate for cash.
  • Downey Financial (NYSE:DSL) stock is tanking. Smart investors know what kind of shape this company is in.
  • They were heavy in the California mortgage lending business. From their profile on Yahoo Finance: “As of March 14, 2007, it operated 169 branches in California and 4 branches in Arizona.” We all know that California real-estate has been hit hard by the credit crunch.

If you are interested in doing more research on Downey Savings, see Mortgage-Lender Implode.

Be careful out there with your money.

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Comments (4)
1 Star2 Stars3 Stars4 Stars5 Stars (16 votes, average: 3.81 out of 5)
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4 Existing Comments
  1. Dan Tanner said:
    on August 22nd at 03:42 am

    Downey Savings and other banks are all hard hit. They will survive. Most should survive this market.

    Isn’t it amazing what consumers can do to the real estate and banking systems once they stopped buying real estate?The glue fell off the trap.

    This misery will continue and hardship for lending institutions will prevail, if the mind set of US consumer is still hinged on the fact that real is some kind of millstone around the necks, rather than a wealth building tool.

  2. Ian said:
    on August 25th at 09:33 pm

    One thing to keep in mind regarding stock prices is that hedge funds love to find people whose stock has held up well and spread rumors about them to try and get their stock to fall, since they are holding a short position. Not saying that this is happening here, just that stock prices don’t always reflect the true underlying value of a bank.

  3. edward barns said:
    on November 20th at 12:27 am

    I have a relative in this company and he says… GET OUT

  4. Teri said:
    on November 22nd at 04:23 am

    Downey Savings was siezed by the FDIC tonight, then purchased by US Bancorp. It will be fine… don’t panic.