On Friday another 6 banks were seized by the Federal Depository Insurance Corporation (FDIC). This brings the 2010 total to 15, following the 140 banks seized last year.
The largest bank seized Friday was Los Angeles-based First Regional Bank, with nearly $2.2 billion in assets and $1.9 billion in deposits. The expected loss to be incurred by the FDIC is $825 million.
The other banks seized included First National Bank of Georgia; Community Bank and Trust of Cornelia, Georgia; Florida Community Bank of Immokalee, Florida; Marshall Bank of Hallock, Minnesota; and American Marine Bank of Bainbridge Island, Washington.
In total, the combined assets of the six banks were $5.5 billion, while deposits totalled $4.9 billion.
The two Georgia banks bring that state's total to 27 since the beginning of 2008, placing it first among failed banks.
Each bank was taken over. First Citizens Bank & Trust of Raleigh, North Carolina, will assume the balance sheet of First Regional Bank; Community & Southern Bank, also based in Carrollton, Georgia, agreed to assume the deposits and assets of First National Bank of Georgia; SCBT, a national bank based in Orangeburg, South Carolina, will take-over the balance sheet of Community Bank and Trust; United Valley Bank, based in Cavalier, North Dakota, will absorb Marshall Bank; Miami-based Premier American Bank will assume the balance sheet of Florida Community Bank; and Columbia State Bank of Tacoma, Washington, will take American Marine Bank.
The banking crisis will continue to deteriorate, especially as the next dip of the depression takes hold. Marko's Take? It will take AT LEAST one and maybe more BIG Banks with it. Could you imagine the implication if, say, Bank of America or Citicorp failed?
In his State of the Union address, President Obama said he would initiate a $30 billion program to provide money to community banks at low rates, if they boost lending to small businesses.
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Marko's Take
Showing posts with label finance. FDIC. Show all posts
Showing posts with label finance. FDIC. Show all posts
Sunday, January 31, 2010
Tuesday, December 22, 2009
Bank Failures Continue Unabated
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.
Marko's Take
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!
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.
Marko's Take
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!
Saturday, November 28, 2009
Are We Staring At ANOTHER Banking Crisis?
A few short days ago, Sheila Bair, the head of the Federal Deposit Insurance Corportion (FDIC), released details of the agency's quarterly report. The findings were downright alarming.
The FDIC operated "in the red" for only the second time in history, showing a quarterly loss of approximately $8 billion. The only other quarterly loss was in 1991 with a $7 billion shortfall. To be clear, this means that the amount "paid out" to depositors, along with the associated costs of doing so, were greater than the income earned from fees paid by banks for this insurance. The fees were raised last year and may have to be raised yet again.
Bair reports that, as of last quarter, it DOES still have $23.6 billion in cash, but private estimates project that ANOTHER $100 billion will be needed to be shelled out by 2013. Of course, at taxpayer expense!
This informtion isn't meant to scare you or anyone else. Fortunately, the FDIC has the ability, at its discretion, to access a substantial credit line from the Department of Treasury. Thus, as things stand, the deposit insurance of $250,000 per institution is not immeditely threatened.
The FDIC insures nearly 8,100 banks. Of these, they now consider 552, or about 7%, to be on its "problem list", up from 416 at the end of the second quarter. The "problem" institutions are not disclosed for fear of triggering bank runs, but their assets total nearly $350 billion!
Bank industry profits were $2.8 billion in the third quarter, which represents a stark reversal. However, losses are expected to resume in the 4th quarter as large write-offs are expected. Unfortunately, according to research by the Associated Press, 40% of the "profit" could be accounted for by a one-time mystery accounting gimmick.
The problems don't come close to ending there. The Office of Thrift Supervision, which monitors an entirely different set of institutions, reported that its "problem list" rose from 40 to 43 in the third quarter. Thrifts differ from banks in that they are subject to a requirement that mandates 65% of their lending be done in the form of consumer loans and mortgages. That requirement makes them heavily dependent on housing and unemployment.
Among the most disturbing aspects of the FDIC report was its disclosure of lending activity. Loan balances FELL by the largest amount in any quarter since the data began to be compiled in 1984: $210 billion or 3%. To be fair, a large part of the decline is a result of stricter regulations meant to ensure greater prudency.
Finally, the growing banking problems extend to Europe as well. Last week, as reported by Dominique Strauss-Kahn, chief of the International Monetary Fund, or IMF as it's more commonly known, HALF of the losses suffered by European banks could still be hidden in THEIR bank balance sheets.
I hope everyone had an enjoyable Thanksgiving. I have a number of topics I plan to cover in the upcoming days and weeks, including regular updates on Gold and Silver. And, this coming Monday, Part 2 of my essay on the California Fiscal Crisis will be published. I welcome your comments, pro or con and will respond to each and every one of them.
Marko's Take
The FDIC operated "in the red" for only the second time in history, showing a quarterly loss of approximately $8 billion. The only other quarterly loss was in 1991 with a $7 billion shortfall. To be clear, this means that the amount "paid out" to depositors, along with the associated costs of doing so, were greater than the income earned from fees paid by banks for this insurance. The fees were raised last year and may have to be raised yet again.
Bair reports that, as of last quarter, it DOES still have $23.6 billion in cash, but private estimates project that ANOTHER $100 billion will be needed to be shelled out by 2013. Of course, at taxpayer expense!
This informtion isn't meant to scare you or anyone else. Fortunately, the FDIC has the ability, at its discretion, to access a substantial credit line from the Department of Treasury. Thus, as things stand, the deposit insurance of $250,000 per institution is not immeditely threatened.
The FDIC insures nearly 8,100 banks. Of these, they now consider 552, or about 7%, to be on its "problem list", up from 416 at the end of the second quarter. The "problem" institutions are not disclosed for fear of triggering bank runs, but their assets total nearly $350 billion!
Bank industry profits were $2.8 billion in the third quarter, which represents a stark reversal. However, losses are expected to resume in the 4th quarter as large write-offs are expected. Unfortunately, according to research by the Associated Press, 40% of the "profit" could be accounted for by a one-time mystery accounting gimmick.
The problems don't come close to ending there. The Office of Thrift Supervision, which monitors an entirely different set of institutions, reported that its "problem list" rose from 40 to 43 in the third quarter. Thrifts differ from banks in that they are subject to a requirement that mandates 65% of their lending be done in the form of consumer loans and mortgages. That requirement makes them heavily dependent on housing and unemployment.
Among the most disturbing aspects of the FDIC report was its disclosure of lending activity. Loan balances FELL by the largest amount in any quarter since the data began to be compiled in 1984: $210 billion or 3%. To be fair, a large part of the decline is a result of stricter regulations meant to ensure greater prudency.
Finally, the growing banking problems extend to Europe as well. Last week, as reported by Dominique Strauss-Kahn, chief of the International Monetary Fund, or IMF as it's more commonly known, HALF of the losses suffered by European banks could still be hidden in THEIR bank balance sheets.
I hope everyone had an enjoyable Thanksgiving. I have a number of topics I plan to cover in the upcoming days and weeks, including regular updates on Gold and Silver. And, this coming Monday, Part 2 of my essay on the California Fiscal Crisis will be published. I welcome your comments, pro or con and will respond to each and every one of them.
Marko's Take
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