E*TRADE Financial Corporation (ETFC) stock down over 50% today?

[Jonathan]

Huge volume swell.

Company says it can absorb a write-down up to $1 billion, market cap is 1.5 bil, so that's 2/3 of its capitalization.

In summary, what went wrong?
Will E*trade go into bankrupcy?
Do you think they will come back?

TY all

http://finance.yahoo.com/q?s=etfc

[As Real As It Gets]

Be prepared to lose $18,000 Christopher (if you're telling the truth, which I doubt you are). That risk assessment analysis has driven a nail into e-trade's coffin.

[jhnvtjll]

I don't know, but I just bought 1000 shares @ 3.54.

[Frank Castle]

1) They are also a bank and like any other bank they lend money to buy houses and those houses are now worth less money than a year ago.

Example:
You want to buy a $500,000.00 house and you ask for a loan.
E*Trade gives you the cash and you buy your house and everybody is happy.

If you don't pay for the loan then they will take your house and sell it to somebody else for $500,000.00

E*Trade does not have $500,000.00 (Nobody has any money) and they must sell your loan to somebody else (Probably in Japan)

The Japanese Bank buys your loan for $500,000.00 USD in cash plus 50% of the interest you are going to make in the future)

E*Trade uses that cash to lend the money to another customer buying also a $500,000.00 house and the cycle starts over.

The trouble starts when the house drops to $450,000.00

If you don't pay for the loan and E*Trade takes your house and your house is now worth just $450,000.00 then they will lose $50,000.00!

The Bank from Japan will no longer pay $500,000.00 for the loans. They now want to pay less because the house could drop in value to $450,000.00 in the future.

Now multiply that for 10,000 houses and you have a big problem.

2) No.
3) Yes.