Posted tagged ‘failed banks’

Record Nine Bank Failures Yesterday

October 31, 2009

2228036852_f9705e9266The FDIC shuttered nine banks on Oct. 30, 2009, bringing the total for the year so far to 115.

Yesterday’s closures will cost the FDIC an estimated $2.5 billion, combined.

According to an AP report (via Clusterstock):

Regulators shut California National Bank of Los Angeles and eight other banks as the weak economy continues to produce a stream of loan defaults.

The banks closed by the Federal Deposit Insurance Corporation were in California, Illinois, Texas and Arizona. They were divisions of privately held FBOP Corp., a Chicago-based bank holding company.

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the deposit insurance fund. It has fallen into the red.

Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.

The 115 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.

The 115 bank failures this year compare with 25 last year and three in 2007.

The number of banks on the FDIC’s confidential “problem list” jumped to 416 at the end of June from 305 in the first quarter. That’s the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.

Also, be sure to check out this interactive visual of recent bank failures from the Wall Street Journal. The graphics are great. They really help put the whole mess in perspective.

Bank Failures in 2009 Reach 100

October 23, 2009

closed_bankThe FDIC shut down Partners Bank of Naples, FL today, raising the total number of failed banks in 2009 to 100.

 Back in August, the size of the banking crisis during this “Great Recession” had already far surpassed the Great Depression. But even with 100 banks now down, there are still hundreds more about to fail.

 How is your bank doing?

Update:

  Three more banks added to the list (so far) since #100.

 Anticipated costs to the FDIC (aka taxpayers) for today’s closures:

 Partners Bank                  $28.6 million
American United Bank  $44 million
Hillcrest Bank Florida   $45 million
Flagship National Bank $59 million 

Total…. $176.6 million. Which is actually not much, relatively speaking. Costs have been far higher when larger banks were closed.

Update II:

Add three more since the last update, a new grand total of 106 failed banks this year.

Bank of Elmwood $101.1 million
Riverview Community Bank $20 million
First DuPage Bank $59 million

Bringing the estimated FDIC cost to $356.7 million today.

Five More Failed Banks

September 5, 2009

045-0904063502-house-of-cards-sThe FDIC took over five more banks yesterday, bringing the total number of failed banks for this year to eighty-nine.

The Current Banking Crisis Is Much Worse Than The Great Depression

August 25, 2009

I’ve said all along that you can’t compare the actual numbers of failed banks during the Great Depression to the actual numbers of failed banks in the current crisis and use that as proof that things aren’t as bad this time around.

What I wanted to know is what are we talking about in terms of actual dollars, adjusted for inflation? What I mean is, when a bank the size of WaMu, Guaranty, Colonial or IndyMac fails, how many Depression-era banks would it be equvalent to?

Are we approaching the same amount of losses today? Have we surpassed previous losses already?

I finally found what I was looking for at The Street. Adjusted for both population and inflation, this current banking crisis is much worse than the Great Depression. Worse, even, than the S&L crisis of the 1980’s.

The S&L crisis was about five times bigger than the banking crisis of the Great Depression. The current crisis is about 25 times larger than the Great Depression. Both are per capita, adjusted for inflation. The current crisis is so large because the financial sector has grown to unprecedented economic dominance. The financial sector constituted 45% of earnings for the S&P 500 in 2006. If half of your eggs are in one basket, your diet becomes very restricted if you drop that basket.

Read the entire article

Many thanks to John Lounsbury of The Street for doing the research and proving once and for all what a lot of us have suspected for some time now.

Failed Bank List Grows to Eighty-One

August 22, 2009

001-0820064521-Bank-CollapseThis week four more banks joined the FDIC failed bank list, including the second largest of the year – Guaranty Bank of Austin, Texas.

The others are ebank Atlanta, Georgia, CapitalSouth Bank, Birmingham, Alabama and First Coweta, Newnan, Georgia.

While Ben Bernanke may believe recovery is just around the corner, there are still some rather large red flags on the horizon.

McClatchy reports the following:

Delinquency and foreclosure rates for U.S. mortgages continued to rise in the second quarter, with loans to the most qualified borrowers going bust at an unnerving clip, especially in hard-hit states such as Florida and California.The numbers reported Thursday by the Mortgage Bankers Association show clearly that rising job losses are worsening the nation’s housing troubles and threaten the Obama administration’s efforts to keep owners from losing their homes.

Continue reading

The Orlando Business Journal also reported Friday that as of June 30th, “Nationwide, a total of $3.4 trillion worth of property values was in risk of defaulting.”  That’s right – $3.4 Trillion worth of loans at risk of default.

Guaranty Financial Group was crippled not by engaging in overly risky practices but because it bought highly rated, straightforward structured mortgage-backed securities. It lent to home builders. Both of these things were what it specialized in, it’s “core compenentcy,” as it’s CEO puts it. They didn’t buy subprime loans, and didn’t buy much of the super-toxic 2006 and 2007 loans. They thought they would be safe. And they were wrong.

Continue reading

Did we all get it wrong? Calculated Risk has charts of US mortgages by type and loans that are seriously delinquent or in foreclosure by type. The disturbing thing about the second chart is that it clearly shows the crisis has expanded to the Prime loan market in great numbers.

With so many loans defaulting, the list of problem banks remains large. Banking analyst Meredith Whitney predicts more than 300 banks will fall soon. See Calculated Risk for an unofficial list of problem banks.

Where does all this leave the FDIC? Once again, Calculated Risk provides some very informative charts pertaining to estimated losses to the FDIC. And Karl Denninger lays it all out in The Market Ticker – “about 75% of the FDIC’s “insurance fund” has been depleted over the last year.” So is the FDIC broke? Karl think so.

I believe the FDIC is broke and knows it; that under the law they should have seized these three banks (and many dozens more, including some really big ones) some time ago, but doing so will force them to tap the Treasury “emergency” credit line. They’re well-aware that this could instill quite a bit of panic in the public (never mind Congress!); as such they, along with OTS and OCC are conspiring to (once again) hide the truth and pray for an economic recovery before they are forced to act as the law demanded months or even years ago!

A new quarterly report from the FDIC is due out soon. Perhaps that will shed more light on the situation. Or not. Stay tuned.

Another Big FDIC Friday

August 15, 2009

2228036852_f9705e9266Five more banks on the FDIC failed bank list yesterday, including the biggest bank failure of the year so far – Colonial BancGroup Inc. of Alabama.

Bad enough, but it could get much worse. Bloomberg is also reporting that another 150 banks may have “a deadly toxic asset problem“.

Another Big FDIC Friday

August 3, 2009

 Friday, July 31st, 2009.

Five new failed banks on the FDIC list.

Sixty-nine for the year so far and counting with some big banks on the precipice.