A Virtual Run on the Bank? E*TRADE (ETFC) Plunges

Shares of E*TRADE (Nasdaq: ETFC) have been cut it half today on fears of a possible run-on-the-bank, which was sparked by an analyst report at Citigroup. But how could customers see a bank run if there is no physical bank? The panic that could be seen in a depression-style run would involve long lines and yelling customers - this would not be the case at E*TRADE, which has just a few branch offices.

A run on E*TRADE, if it ever was to occur, would not be seen visually - it would be virtual. This could be both good and bad. Good in the sense that customers could not get wrapped up in a mob-mentality type event. Bad in the sense that rumor mongering takes over. At many financial blogs today, you can see talk that "so-and-so" knows "so-and-so" who pulled their money from E*TRADE today.

We agree with E*TRADE that the note from Citigroup, was 'irresponsible'. Because of all the media exposure the report has garnered, the report itself could lead to the panic - not just the financial malaise of the company.

While we agree that the analyst was irresponse, E*Trade needs to take the bulk of the responsibility for not being more forthcoming with its mortgage exposure. This summer, when rumors where swirling about the extent of the company's exposure to subprime loans, the company stated that they were it great financial shape.

Great financial shape to a run-on-the bank in a matter of months? I guess in this uncertain credit market there have been crazier things, but E*Trade has really miscalculated.

E*Trade, along with the others brokers and banks, should release the worst case scenario so investors and depositors alike can make a sound decision on where to put their money.

Keep Up with Real-Time News on E*Trade at Easystockalerts.com

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