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Next shoe to drop; Small and Mid size banks

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posted on May, 25 2009 @ 10:08 PM
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Most everyone might assume that banks in general have been in deep trouble by listening to economic headlines for the last year and a half.......but that is really not true.........(but this misconception strengthened the case for the NEED in bailing these banks out)....to date it has really been the nations 10 largest banks doing really poorly (read insolvent zombie banks)....while the rest of the nations thousands of banks have been lending more and had little exposure to Residential real estate and the tremendous leverage built up there....but things ARE CHANGING

Commercial Real estate is Collapsing (usually lags residential real estate by 18 months).....more leverage was used by smaller banks (not 40:1) but a significant enough amount that i can bet you the FDIC is pissing their pants waiting for this to play out......As commercial real estate loan losses pile up (industrial loan losses as well) at regional and small banks many banks will find them selves unable to meet capital requirements.........we shall see how much lee-way the regulators give these smaller banks....but something to watch for is a run on deposits there or just plain bank failures and some of the deposits will go into the larger banks (Citi....Boa...)...you know the one's that are cutting their lending and credit lines...

so the next shoe to drop should be regional and smaller banks going under.....cutting more credit (economic life blood) from the economy and taking up a lot of FDIC $$$'s........this will hurt the economy because these banks are more representive of main street.......

The WSJ ran an article a week ago that talked about 100 billion in losses coming from small and medium size banks from the CRE (commerical real estate) exposure.....this deserves attention

www.calculatedriskblog.com...

online.wsj.com...

www.azcentral.com...

above top secret can get the heads up to it's members to become more aware of your local banks commerical real estate exposure.....cause their is alot of pain coming to the smaller banks (that have so far faired pretty well).....and the big banks will be happy to get their depositors $

just give it a bump if you think people should be aware of this

[edit on 25-5-2009 by cpdaman]




posted on May, 25 2009 @ 10:30 PM
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reply to post by cpdaman
 


I agree about the commercial real estate bubble but there is also the upcoming Prime mortgage crisis, It wont only involve small banks but also Credit Unions. This will be big when it happens. I think we've lost 33 banks this year (Aprox). Experts expect 50% of bank failures.

If all banks went belly up at once FDIC doesnt have enough money to insure the loss. I never thought I'd see the day that FDIC needed a bailout.



posted on May, 25 2009 @ 10:38 PM
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good heads up on Credit unions....seems they have had and continue to have a lot of exposure to residential real estate loans

the national credit union administration (regulators) inected 1 billion of captial as losses have been mounting already

i would like to see a chart on prime mortgage delinquincy's because i believe they have picked up a while ago

also i believe credit unions have significant exposure to ALT -A mortgages

credit unions should continue to face more pain ( I read credit unions are a 3 tier system so i'm not sure how the "small guys" will be effected sanjose.bizjournals.com... but i imagine it will be bad...

and small and mid size banks will stare down a tsunami of CRE losses

[edit on 25-5-2009 by cpdaman]



posted on May, 25 2009 @ 10:45 PM
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reply to post by wonderworld
 


you beat me wonder.i am gonna stick my neck out and say the next target of failures will be co-op's or credit unions! take more of the peoples money then small bank to cripple small businesses.



posted on May, 25 2009 @ 10:53 PM
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Yup there is news of this all over the place. Prime Mortgage Foreclosure

It's bound to happen with everyone losing their jobs.



posted on May, 26 2009 @ 12:27 PM
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well the consumer confidence index is up today much higher then expected....but of course a reading of 55 or so.....is much below the 100 which indicates a healthy economy but it shows you that american's are WILLING to believe in Green shoots.....heck just being willing to believe sent the market up 250! it pays to be willingly hopeful....even if it seems like a long shot......



posted on May, 26 2009 @ 07:40 PM
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reply to post by bluewaterservant
 





Well we can both make that statement together. None are exempt. Credit Unions among other things.



posted on May, 31 2009 @ 01:03 PM
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reply to post by cpdaman
 


This is a direct link to the FDIC bank failure list, updated pretty often, about weekly it seems.
www.fdic.gov...

Also as we know, it can take years of loans going sour for a bank to be forced to fold...so I do not think we have reached the peak of this yet, worse to come still!



http:/These latest four closures also highlight the fact that the banking woes are not limited just to the largest banks; to the contrary, the bank failures increasingly seem to involve the smaller community banks. Three of the four most recently closed banks had assets below $500 million, and many of the other banks closed this year also were similarly smaller banks.

One generally accepted definition of a community bank is a banking institution with assets below $1.0 billion (refer here). By this definition, 25 of the 29 banking institutions that have failed this year are community banks, as only four the failed banks had assets over $1 billion. Indeed, most of the failed banks are very small; only seven of the 29 banks that have failed in 2009 had assets over $500 million.

For many years, and even throughout the recent financial turmoil, community banks have been viewed as relatively safe. Their lack of involvement both in commercial lending and in subprime loans seemingly spared them the most significant problems that have characterized the current crisis – until now. The growing problems in residential real estate and rising unemployment levels are raising problems even in the community banking sector, as the bank closures described above demonstrate. Based on the 2009 bank closures, the community banking sector may now have become the leading edge for problems in the banking sector.


/www.dandodiary.com/2009/04/articles/failed-banks/2009-ytd-bank-failures-already-most-since-1993/



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