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.
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.
Guaranty Financial Group told to turn over to FDIC for receivership
Interesting little article on the 2nd largest bank in Texas being shut down. From the article, it looks like they made a number of loans to home-builders during the recent housing bubble. Many of these are now into default, reducing their capital level below the prescribed regulation. This is a large failure, the bank had $16 billion in assets at last check. That is going to put more draw on the FDIC’s already limited resources with the multitude of bank failure in 2008 & 2009. What I did like about this is the fact that the bank was first given some time to bring itself into regulation before it was ultimately shut down, that is the trend I want to see. I don’t like having banks play around with the accounting rules when they have obviously have too much liability for themselves and their depositors. Strong banks must survive and the weak one will be consolidated.
News (Bloomberg):
Guaranty Financial Group Inc., the Texas bank spun off in 2007 by a forest products company, may become the biggest lender to collapse this year, wiping out investments by billionaire Carl Icahn’s funds and Omni Hotels owner Robert Rowling.
Seven more U.S. banks fail going into the holiday weekend, brings total to 52 for 2009
The market does not like this news. The Dow down over 2.5% at the time of this writing. This does seem to be accelerating and that does not bode well as a sign for future events to pass. We are going to see more regional and local banks go bust as the loans on their books go into default and that make their capital reserve inadequate for what regulators are requiring. This also is putting a severe strain on the FDIC and its funds. It already has had raise rates this year to cover the number of banks that went bust in 2008.
News (Bloomberg):
Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.
Omni National Bank is the 21st bank failure of 2009
They went under with almost $1 billion in assets. They must of had a lot of bad loans and other assets on their books for the FDIC to come in and shut them down. I wish they would be more open about what the “unsound” practices they were using so the public could be more educated.
News (Reuters):
Georgia-based Omni National Bank was seized on Friday and placed into receivership under the Federal Deposit Insurance Corp, the U.S. government said on Friday.
The bank had about $980 million in assets at the end of 2008, the Office of the Comptroller of the Currency said in a statement.