Run on banks in LA amid crisis; Wal-Mart CEO says customers are 'running out of money'
Wal-Mart CEO H. Lee Scott Jr. says customers are "running out of money."
Earlier this week, consumer juggernauts Home Depot and Wal-Mart reported softer than expected earnings.
Penned the New York Times, "the sober forecasts reverberated across Wall Street, sending the Dow Jones industrial average and the Standard & Poor’s 500-stock index down by nearly 2 percent, with the Dow dropping more than 200 points. Shares of both Wal-Mart and Home Depot fell around 5 percent.
"Economists said the sluggish performance of the chains — Wal-Mart missed its profit forecast and Home Depot’s earnings dropped — could signal broader troubles in the economy."
Buried in the article was a sobering remark indeed: “Many customers are running out of money at the end of the month,” said H. Lee Scott Jr., the chief executive of Wal-Mart.
In Los Angeles, economic concerns hit close to home.
Anxious customers of Countrywide Bank jammed its phone lines, branches and website after the nation's largest mortgage lender -- which owns the bank -- announced it was facing problems from a credit meltdown.
"Countrywide Financial Corp., the biggest home-loan company in the nation, sought Thursday to assure depositors and the financial industry that both it and its bank were fiscally stable," wrote the LA Times Friday. "And federal regulators said they weren't alarmed by the volume of withdrawals from the bank."
"The rush to withdraw money -- by depositors that included a former Los Angeles Kings star hockey player and an executive of a rival home-loan company -- came a day after fears arose that Countrywide Financial could file for bankruptcy protection because of a worsening credit crunch stemming from the sub-prime mortgage meltdown," the paper continued.
"At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names," the Times added. "Bill Ashmore drove his Porsche Cayenne to Countrywide's Laguna Niguel office and waited half an hour to cash out $500,000, which he then wired to an account at Bank of America."
"It's because of the fear of the bankruptcy," Ashmore, president of Irvine's Impac Mortgage Holdings, which escaped bankruptcy itself recently by shutting down virtually all its lending and laying off hundreds of employees told the paper. "It's got my wife totally freaked out. I just don't want to deal with it. I don't care about losing 90 days' interest, I don't care if it's FDIC-insured -- I just want it out."