Expect Many More Bank Failures Ahead

Expect Many More Bank Failures Ahead

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

(visit the link for the full news article)


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What the article did not state is the info given me by more than one bsinessman in central FL, namely, the FDIC went broke last week bailing out banks, the largest of which was Colonial.

Recently, the Real Estate market here said there are now more conventional (non-arm) home-loan failures than arm loans. These are the best loans - once considered the most solid.

Why they continue to worry over small banks when the following big banks risk exposure related to their derivatives are: Bank of America - 179% of risk-based capital;

Citibank - 278%; JPMorganChase 382%;
HSBC America - 550%; Goldman Sachs 1,056%!

1800 regional and smaller institutions are at risk of failure despite bailouts.

Are you buying bank stock right now?


(visit the link for the full news article)

I think that between this and my gut feelings of the economy as a whole (that its being pumped up more than it should be) I feel more secure saying that a bank holiday may be just around the corner. If 1-2 banks close at a time we're ok, but if most of those 1800 fail then it will cause a panic.

Something that I think is important to mention is just the numbers of banks. There were about 40k banks just before the Great Depression, now I think there are only 12k. 2000 then had a lower percentage impact than they will now. Purely a statistical number I know since it doesn't reflect the holdings of those banks, but most people won't pay attention to that.

Wasn't there a supposedly leaked draft memo that said a bank holiday was going to be issued next week?

One CNN article says Stocks spike on recovery hopes. money.cnn.com...

Next article says 81 banks failed so far this year, compared to 25 (really 28) for all of last year. The failure of the last bank (Guarantee Bank) cost the FDIC $3 Billion, who at last count had $13 Billion in March.
money.cnn.com...

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....

[edit on 21-8-2009 by Dbriefed]

True things are Looking better, but remember that even though the crash of 1929 marks the beginning of the Great Depression, it wasn't until 1933 that it was at its worst. This was preceded by a period of things getting better.

I'm not saying we're repeating that, just that recovery can just as easily turn into disaster. Anyone who's watched an episode of House knows that getting better doesn't mean you are 100% cured.

There is no way that the market was 'fixed' or that the economy is doing any better than it was before and during the housing market disaster.

To fix something means you need a correction, and all that happened during that fiasco is funds were transferred from tax payers to corporations to cover bad debt that shouldn't have been issued in the first place.

Now, some people will say that this debt has been taken care of, repackaged and the economy will revive itself now that everyone recognized the problems associated with the previous lending practices.

Bull!

All of it is crap. There was no correction, Too many people had too much money. And the money they had (technically nothing) was created from nothing with increasingly growing invisible interest attached to it.

What's that mean?
For there to have been a market correction something terrible would have to happen. When something becomes ridiculously inflated, there has to be an equal amount of deflation to make it neutral again. The people controlling the money don't let this happen. They simply adjust the amount of inflation.

If there is only so many goods produced every year, and you start letting the public write IOU's it means that people are taking from the actual production and depositing no valuable commodity in return.

In a barter system, a gold miner trades gold for a house, the builder trades the gold to a smith for jewelry, the smith trades some gold to a farmer for food, the farmer trades that gold for animals from the rancher, and so on and so on. There are endless possibilities in the barter system.
Now, our money, should represent a commodity, because if it does, it becomes a substitute for a commodity in trade and holds value.

Lets say instead of trading gold you wrote the value of gold on paper. Now the miner pays for the house in with the note. He didn't have to work this time and had a house built for him, he pays a portion of his future earnings to the bank.

Everyone in the community does this, and now instead of gold being traded its just paper. And now there is so much paper around everyone stops working as much. Reality kicks in though. All this paper made everyone feel rich, the bought 3 times as much stuff and original production capacity never changed. They still have the same amount of resources but everyone is using 3 times as much.

SO.... The market correction... It sucks. You will see it when people start to really suffer. And we need a big market correction. It could be overseas, it could be here. But there needs to be a period of poverty for a lot of people

OR!! (A MUCH BETTER OPTION) There needs to be better (actual) planning for use and production of resources. Better planning on how much goes into production, regarding everything (food,clothing,energy) Better governing, less wealth being hoarded, The world produces so much goods and services every year. Those goods need to be divided up between the people.

Instead, because of politicians and business, we are ineffective at planning and consuming. We are not doing it so as to be sustainable. There is over consumption and there has been no market correction, there has been poor planing and no market correction.

It will suck for a lot of people but the correction is coming.

I came across this very good article from one of Denninger's Ticker's.

Colonial Bank Failure Highlights the Problem
From Seeking Alpha

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's very well done and end's with a bang.

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!

Speaking of bank failures though, I remember Denninger and the folks at his site talking about Colonial, Guaranty, and Corus (which I don't think has "officially" failed yet) being bankrupt for weeks if not months now.

The FDIC will definitely have to get more funding soon.