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What if brokage firms go bankrupt?

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The drama in wall street did not end on last Friday. Today E-Trade, the few dot com survivor, came into news about is exposure to Mortgage Backed Securities (MBS). In these days, MBS are pretty much like useless paper, because of the sub-prime crisis. Accoring to analyst, the chance of E-Trade go bankrupt is still remote, or 15%. But this will make the E-Trade investors and customers nervous, and its competitors happy. So, what if E-Trader eventually do go bankrupt? What does that mean to its investors and customers?

For E-Trader investors (stock holders of ETFC), it is simple: that means total loss.

e-trade logo

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