ETFC, part II (Revenge of the Nerd)
I actually dug up the filings and did the math, and everything. Basically:
ETFC is valued by the market at about $2B
ETFC's total asset face value is about $52B
ETFC's total liability face value is about $48B
ETFC's book value is, therefore, about $4B
ETFC has a subprime-threatened "Asset-backed Security" portfolio with a face value of about $3B
If we assume that write-downs wipe out a third of ETFC's endangered portfolio, they will be left with a BV of about $3 billion, PB < 0.67; that's not bad.
If we assume that write-downs wipe out half of ETFC's ABSP, they are left with BV of $2.5 billion, PB about 0.8; still not too scary.
If we assume the ABSP somehow drops to within a hairsbreadth of worthlessness (a pretty preposterously gloomy scenario, if you ask me), ETFC's BV becomes a little over $1 billion, and the PB is about 2. That's not appealing under the circumstances, but hardly worth all the panic.
Meanwhile, people who are rich enough to have more than the $500,000 covered by the SIPC are probably knowledgeable enough to have figured all this out anyway. I think E*Trade will be back in black before you know it.
Disclosure: I own ETFC in my real money portfolio.