U.S. problem bank list climbs to 829
It really puts it into perspective that last year this time, this troubled bank list was only at half the size it is today. This happened in the backdrop of a supposed recovery. We are at 118 bank closures for 2010 on track to hit 150 by years end. We are going to have a bumpy fall. Good luck!
CNN - The government’s list of troubled banks hit its highest level since 1993 during the second quarter, although the pace of growth continued to slow, according to a government report released Tuesday.
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5 more banks shut down by the FDIC costing over $300 million
Five more bite the dust over the weekend. Our total for 2010 to a whopping 78 banks put into receivership by the Federal Deposit Insurance Corporation or FDIC. The banks ranged from Florida, Nevada and California. They collectively cost the insurance fund $317 million dollars. As reported by AP, the fund will be depleted $100 billion dollars by 2016. With there no incentive to over-report these numbers, we can be safe to say that it will be much more than that once all the final numbers come in.
Banks are now pre-paying two years of deposit insurance premiums. That is not a good sign, it shows that many more failures are expected before this expanding crisis is over. The problem list has also expanded to 775 banks, these are banks that the FDIC are monitoring closely to see if their liabilities outstrip the assets on there respective balance-sheets.
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Troubled bank list balloons to over 700, doubling from 2009
That is a staggering figure, 1 in 11 banks are at risk of failing in this country. Even though the media and politicians keep talking about a recovery, the facts on the ground support that we are not out of the woods. We still have plenty of debt in our financial system that is over-valued and needs to be written down or defaulted and until that happens we will not be able to let our normal economic indicators works as they would like having normal rates of interest without massive government programs that are backing much of our financial industry.
CNN, New York - More than 700 banks, or nearly one out of every 11, are at risk of going under, according to a government report published Tuesday.
The Federal Deposit Insurance Corp. said that the number of banks on its so-called “problem list” climbed to 702, its highest level since June 1993.
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FDIC shuts down AmTrust Bank and 5 others to bring total to 130 in 2009
Having AmTrust fail is pretty major being they had $12 billion in asset when the FDIC put them into receivership. According to the AP release, AmTrust losses were connected to exposure to loans connected to land deals and construction developments. FDIC has been telling Congress that its deposit insurance fund is dangerously low if not already negative. This failure alone is going to cost the fund $2 billion dollars. According to the release, the FDIC still has $21 billion in a separate reserve fund and a $500 billion dollar credit line from the U.S. Treasury.
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U.S. Bank Failures Hit 105 in 2009
We are not out of the woods yet. We crossed the 100 bank failure mark this year. A total of seven banks had their door shut this Friday according to the FDIC. As of August, the FDIC still has 416 banks on their “watch list” so it is likely we will see more failures in 2009 and 2010 if not longer. Here is a troubling statement made in this Bloomberg article that discusses the term “zombie bank” which refers to a bank that is basically insolvent but have still not been shut down.
The number of bank closings would likely be higher this year if the FDIC’s fund wasn’t depleted and if the agency had more bank examiners, RBC’s Cassidy said. The agency shrank under President George W. Bush before adding employees in the Obama administration. The FDIC has about 6,000 employees now, compared with 21,000 during the savings-and-loan crisis in 1991, he said. “We certainly know there are hundreds and hundreds of zombie banks out there,” Cassidy said. “The only alternative for them is to be seized and it’s only a matter of manpower and money before they get to it.”
Lately, the FDIC has had its deposit insurance stressed because of these numerous bank failures, they have raised the premiums they charged banks to securing part of their deposits.
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99th U.S. Bank Failure of 2009 Strikes with San Joaquin Bank of Bakersfield California
More losses from sub-prime home loans and defaulting commercial real estate loans are becoming a common theme. Sub-prime loan defaults are to be expected with many of those properties having mortgages written at a value that reflects the real estate bubble of 2003-07. Many of those borrowers did not have the income to support the increased value of those homes and were using the sale or “flipping” of the home as their exit strategy. What is more troublesome is the increasing theme of banks that hold commercial paper on their books causing them to fail.
During the same period, many bank wrote construction loans and a large amount were for condominiums and retail shopping centers. If you have seen how consumer spending has decreased and many condo projects are being foreclosed on, it makes sense that this type of loan along with others are dragging down on the banks. The stock may be up but the more I look at the numbers, a “double-dip” recession can not be ruled out. The consumer needs to come back at large to maintain the earning expectations that we have priced in at this point. I’ll keep you posted.
Reuters, Washington D.C. - One more U.S. bank was shuttered on Friday, as the tally of failures so far this year inched closer to 100.
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U.S. regulators close failed Corus Bank with $7 billion in assets to bring 2009 total to 92
This is the 4th largest bank failure of 2009. According to the FDIC, Corus Bank will cost their deposit insurance fund $1.7 billion dollars. Corus Bank had a lot of exposure to commercial real estate and construction loans. Looks like this was its undoing. I will be watching as more banks fail to see if we keep seeing more exposure to this type of paper just like in 2008 it was subprime loans and home equity loans.
Reuters, New York – U.S. regulators seized Corus Bank on Friday in the fourth-largest bank failure this year and sold its deposits to MB Financial Bank. Long controlled by the Glickman family, Chicago-based Corus Bank crumbled under the pressure of bad loans on commercial real estate and condominium developments in Arizona, southern California, southern Florida and Nevada. The seizure of Corus and the failure of two smaller banks announced on Friday brought to 92 the number of shuttered banks in 2009.
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