On Friday, an additional 7 banks were seized by the FDIC, bringing the year's total to 140. As usual, the bank closures occured after closing on Friday and the re-openings were orchestrated such that they could appear unscathed by Monday morning. God knows, we mustn't see anything like a "bank line" ala the Great Depression! That just might give the impression that the country was in some kind of trouble, which as we well know, it isn't. Right?!
The FDIC, which insures deposits at the failed banks, is finding it increasingly difficult to find buyers. In the case of last Friday's closures, 3 of the 7 have yet to be bought. Prior policy had been to arrange a buying bank and to enter into a "loss-share transaction" over the weekend. The FDIC was forced to assume $1.9 billion of failed bank assets for future disposition. As of September 30th, the amount held for future disposition had been a staggering $30 billion!
The 7 failed institutions had combined assets of $14.4 billion and $11.2 billion in deposits. The estimated loss to the FDIC Deposit Insurance Fund, i.e. US as taxpayers, was a "mere" $1.8 billion. At least we're not talking about "real" money!
The 7 closures included 2 in California: First Federal Bank and Imperial Capital Bank. The other 5 were located in Florida, Michigan, Illinois, Alabama and Georgia.
As we've been told time and time again, our banks and entire financial system, for that matter, are safe! Just tell that to the FDIC, which is running in the red and holding a large quantity of assets.
What do YOU think of our banking system? If you're getting nervous, I wouldn't blame you. I welcome you to "Take Me On" in the comments section below.
P.S. 3rd Quarter GDP was just revised downward for the SECOND time to 2.2%. It had been originally estimated at 3.5%. Yup, everything in the economy is going swimmingly well!