Run on banks in Los Angeles

This can't be good. People are already panicking and the worst most likely is still to come.

Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to
pull out their savings) because of concerns about the financial problems of the mortgage lender that owns the bank.

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. And federal regulators said they weren't alarmed by the volume of withdrawals from the bank.

The mortgage lender said it would further tighten its loan standards and make fewer large mortgages. Those moves could make it harder to get a home loan and further depress the housing market in California and other states.

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.

Should they panic? Ya bet your sweet ass they should. Look at this:

Last Tuesday, Andy Parker got a telephone call he wasn't expecting.

It was the Millersburg tax collector, who informed him that the check from his mortgage company to pay school taxes had bounced.

Like many people, part of the mortgage payment Parker makes every month goes into an escrow account that the lender uses to pay property taxes. Parker's mortgage lender, Melville, N.Y.-based American Home Mortgage Investment Corp., is required to hold the escrow money and pay the taxes when they are due.

American Home Mortgage filed for Chapter 11 bankruptcy protection in Delaware on Aug. 6. The bankruptcy protects the company from creditors while it continues to operate and restructures.

That matters little to Parker, whose school taxes haven't been paid.

"Bottom line, I am worried about my credit score and how it will be reported," Parker said. "Ultimately, it remains my responsibility no matter what happens."

He's not alone.

As I posted as a comment somewhere, there's gonna be a bear market for vans and cardboard boxes as more and more people become homeless.