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Expect Many More Bank Failures Ahead
Thursday, August 20, 2009 10:47 AM
By: Julie Crawshaw Article Font Size
The number of banks that had non-performing assets equal to at least 5 percent or more of their assets — considered a critical threshold - more than doubled in the year through June, according to data compiled by Bloomberg.
Altogether, the 150 banks hold assets of $193 billion, 15 times the FDIC's entire insurance fund.
“These numbers are off the charts,” says Blake Howells, an analyst at Becker Capital Management, referring to the nonperform
Third largest bank failure of 2009 announced
Texas-based Guaranty Bank is bought by Spanish bank. Regulators also seize institutions in Alabama and Georgia, bringing this year's tally to 81.
By Ben Rooney, CNNMoney.com staff writer
Last Updated: August 21, 2009: 8:48 PM ET
NEW YORK (CNNMoney.com) -- Guaranty Bank was closed by federal regulators Friday in the third largest bank failure this year bringing the total number of failures to 81 in 2009.
The Federal Deposit Insurance Corporation was named receiver of the Austin, TX-based thrift, which had approximately $13 billion in assets and $12 billion in deposits as of June.
BBVA Compass, a U.S. subsidiary of Spanish bank Banco Bilbao Vizcaya Argentaria, agreed to assume all of Guaranty's deposits and will buy $12 billion of its assets. The FDIC said it would share losses on $11 billion of the failed bank's assets.
The 162 branches that Guaranty operated in Texas and California will reopen Monday as branches of BBVA Compass, which is based in Birmingham, Ala.
Guaranty was the third largest bank to fail in 2009. It tied for the title of 11th largest bank failure in U.S. history with First City Bancorporation, which failed in 1988.
The estimated cost of Guaranty's failure to the FDIC is $3 billion....
The bankruptcy of Colonial Bank (CNB) was the largest bank-bankruptcy in the U.S. since several large, U.S. financial institutions collapsed last year – with the most recent being Washington Mutual, last fall. However, there is one huge difference between the mega-bankruptcies of last year and the collapse of Colonial Bank a week ago. During the large bank-failures of 2008, the acquiring institutions wrote-down the “assets” on the books of these banks by an average of 18% - according to a Bloomberg article. However, when BB&T Corp purchased Colonial, it immediately wrote-down Colonial's assets by 37%, double the amount of discounting done last year.
it might be time for the Wall Street banksters to take heed of history. They may own the politicians. They may own the regulators. And they may simply own most of America. However, they don't own the billion or so guns currently in the possession of an increasingly angry American population. Massive economic suffering and a billion guns is a very dangerous mix!