MiTurn, the FDIC didn't release an emerging risk report at the end of 2007. So these are still the most current numbers - and I thought the failure to release the report spoke volumes (FFIDC and I discussed this in the comments back then).
I have a savings account at AmTrust, an Ohio bank. They recently offered a $50 bonus if I would make at least 3 automated monthly deposits of at least $100 each. That's quite the effective interest rate. Today I received an offer of $25 if I would roll over a pair of (not very large) CDs.
My bet is that AmTrust is on the FDIC's death--er, watch list.
Do I make sure that I'm in first place in the inevitable bank run, or do I trust to the FDIC to replace my money in the one working day that it mentions on its web site....
"Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside"
This is scary. I wonder how long it would take for one of ( or all ) of the top banks to need the FDIC. I believe the article said they had $52 billion. My CDs come due on 07-16-08. I have my money in one of the bigger banks. I sure hope I get it back with the interest! I started putting large amounts of cash in a safe the past couple of months. Seems to me the FDIC could burn thru that $52 billion very fast. If I recall correctly it could also take a long time to get it from them.
Peconic Bay--not only did I grow up there as a Kid, I particularly appreciate your insigtful comments.
Net interest margin (NIM) the spread between loan rates and deposit rates
falls when interest rates rise, because interest rates on deposits adjust more quickly than interest rates on loans. Further, when interest rates rise, the economic value of longer-term instruments (assets) falls by more than the economic value of shorter-
term instruments (liabilities), thus reducing the banks capital. Today I think IB's, national banks and the Fed are trying to create the reverse. They are not passing through the interst rate reductions on the consummer and corporate level. Thus widening the spread. But pushing on a string is a problem.
Don't worry. There's only a fifty percent probability of a recession. And if there is a recession, it'll be a short, shallow one. And if this theoretical recession occurs, at least the CRE segment of the economy won't take much of a hit.
This also means retail shouldn't get hit too badly. This also implies that consumer spending will largely continue as-is.
I've recently updated my four or five - variable economic model, so I couldn't possibly be wrong on this.
Any suggestions on how to determine the health of a specific bank, credit union, or S&L? Does NCUA or the S&L agency release similar statistics or does FDIC stats combine all similar institutions?
You've mentioned the monoline insurance companies' flatlining quite a bit. Do you know about the health of private bank deposit insurers such as American Share Insurance which insures credit union deposits? How much pressure can they withstand?
This isn't good. Failing banks are never a good thing.
My wife (Japanese) and I have a place in Kyoto Japan. Weve had money in a postal account (.25% interest) there for about 17 years. Ive been on her ass to do something with it. She always tells me we dont need to worry about exchanging money when we're there. I feel a lot better now knowing its there if we were to need to get the hell out of the US for an extended period of time. CYA.
This time around we have more to fear than fear itself. The banking executives, government officials, and candidates for president are not doing the nation a service by concealing and ignoring our losses. Finance, as the driver of an economy, is finished, but the deployment of capital is still an indispensable arm of a real economy. Sooner or later we'll get back to money that stands for something and banks that function as credible repositories of wealth. But we haven't even started down the path to that place, and the longer we pretend that we don't have to go there, the worse the journey will be.
I do wish CR would include his views on the sidebar here.
Very good question about the credit unions. Anyone???
Also, I worry about my investments in my online brokerage firms. They are, after all, sitting on billions of dollar of margin which could unwind very fast. Also, online brokerage houses have become online banks with significant mortgage lending. And since the FDIC doesn NOT insure equities, will my equity investments in TDameritrade, Scottrade and Etrade be safe?
Etrade is already wobbly. Seriously, we're talking about my future and my family's hard earned wealth being taken away. Poof.
"Seriously, we're talking about my future and my family's hard earned wealth being taken away. Poof." -- SK
As long as it's your family's hard earned wealth, easy come, easy go. And, if you are worried about income, may I suggest prostitution, drug enterprises, or selling non-vital organs on the internet. Oh, yes, I almost forgot. Whatever you do, don't do what they do or you will be like them.
Any suggestions on how to determine the health of a specific bank, credit union, or S&L?
For the health of a specific FDIC insured bank, you can look at the CALL report. Those can be pulled thru the FDIC site (and they are lengthy and require much reading and interpretation).
Seriously, you recommend pulling money (stock equity) out of Etrade? I can liquidate the portfolio any time, but I'd hate to do that.
And what about TDameritrade? And Scottrade? I own equities on all three.
Short of taking delivery of my stock certificates, I don't know what else to do. I've actually investigaed doing so. It has a termendous downside; namely, you cannot sell an equity using your paper certificate in any timely fashion. A stock could go under, and I'd be locked out a week by the paperwork.
I don NOT want to put everything into cash. I'm already invested way to heavily in gold and silver stocks and ETF's. Short of buying silver and gold eagles and putting them in a safe deposit box (inside a failing bank!) what the hell do you do?
SK,buy gold and a Bullet mold,cast bullets,spray with rustoleum gray,and load in .44 Mag cases.substitute cocaine for gunpowder to avert possible accidents.
SK writes:
Also, I worry about my investments in my online brokerage firms.
That makes two of us. I use Schwab and don't have any positions at the moment. The Schwab Bank is FDIC insured but pays less than 1%. I keep most of my trading cash in a SWVXX fund (@ 3.45% this week) When I need it to pay for trades I dont need to sell the fund till 2 days after I buy/short a stock. But this isn't FDIC insured. I have a headache now also.
I think Ive been doing too much reading about all this. I hope Im just being over cautious. Hmmmm, maybe not.
Detailed financial information on all federal and state chartered credit unions can be found at ncua.gov in the Credit Union Data area. Credit Unions, as a general rule, are much better capitalized than banks and the NCUSIF fund is in much better shape than the FDIC (NCUSIF is the credit union equivalent of the FDIC). There will be credit union failures this year and next, but the credit union system overall is quite strong. The biggest exposure for credit unions is probably HELOC's in areas that are seeing steep price declines. But most credit unions, although not all, never went above 80% LTV. In general, most credit unions actually stayed with more "traditional" lending standards over the last few years. If I had a substantial amount of money in a credit union I'd take a look at their numbers at ncua.gov. I'd have no worries about amounts within the insurance limit.
With SA mines shutting down, IMF gold sales are trotted out right on cue... what utter BS. Chinese are going to be very happy with us round eyes and our stupidity.
Hey let's just bring back regulatory capital and put the failures off for a few years. While we're at it, let's also come up with some new and innovative ways for banks to invest their funds so they can "grow" their way out of their problems just like the S&L's did. lol
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside"
That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
Short of buying silver and gold eagles and putting them in a safe deposit box (inside a failing bank!) what the hell do you do?
What do you mean, "short of?"
Why haven't you done exactly that? Or buried them in your back yard?
I don't get it. For ten years I've been telling people to drop by their nearest coin or pawn shop and buy up all the junk silver coins they can get their hands on. Nobody has done as I advised. Not one. Meanwhile, silver has gone up 500% in value.
It is time for my 3 minutes of seriousness a day. My sense is fear is being overtaken by panic. Fear can be somewhat rational. Panic is completely irrational. When irrational people rule, it becomes difficult to figure anything out. I like PMs, but gold seems high on a historical graph while silver could be a bargain (or way overvalued). Shorting seems like the best bet, but you've got a bumbling gov't that can cause problems. Cash seems like a good position in the ST, but the ST soon starts to get longer, and you lose there. What to do? My best guess is the safest investment is buying life insurance on feeder cattle, but what do I know?
I bought some silver maple leafs just a month ago at 16.80 a coin. Now at 18.50 a coin. I wanted to invest more, but we'll see, since its gone up so fast.
In all seriousness, what's your plan with the metal in the safe? To whom will you sell? How do you forsee the eventual selling of your gold play out?
And buying bags of junk silver coins seems highly risky. I could dump the bag on a table and not know what the hell I'm looking at or if it were of true value. Coin dealers don't have the best reputation.
And what's a reasonable premium above the day's stated .oz rate?
Maybe I'm being stupid, but buying physical gold/silver just seems like a big leap most people will not make.
FWIW, I'm just continuing to work through the logic of what to do in light of the train I see headed down this tunnel.
PM...Gold is high and the ratio between Silver and Gold is way out of balance from the historic norm (presently 50X plus vs about 16). Assuming that that ratio also reverts to it's normal level, either silver has to skyrocket or gold has to tank. Given that silver is also an industrial metal and the global economy takes a major lump, the demand for silver from industrial users will drop; will the demand from those who see silver as a store of value offset? In the west, demand will probably rise as most simply will not be able to afford gold.
I've been curious as to the Chinese gub'mint's stance on allowing its citizenry to afford gold. I believe the arguments that we are not decoupled from the world - hell, I was in Walmart last week - so their financial system will probably take a major hit in the future. With the loss of wealth in the collapse of those markets, will their citizens move (or be able to move) into gold?
If so, I'd anticipate an aggregate rise in gold value. Not to mention that the Chinese don't do national level things on a whim, i.e. pushing gold mining to such an extent that they overtake S Africa as the #1 global producer of gold. They wouldn't push this stuff just to see all that investment collapse. I would anticipate a spike in PM before a collapse, so the question is when to get out of that. But into what?
All that said...we've scrapped plans on vacation this summer. First the wife's chance to go to Russia w/eldest child, then the rental house at the beach for everybody, including extended family.
daily prices and premiums are listed on Kitco.com. i don't necessarily see myself using the coins per say but using them as collateral for all those dollars i could borrow in the future.
CT: Here is what bankrate says about AmTrust in Ohio:
The institution reveals, as previously stated, questionable asset quality. That conclusion incorporates our analysis of data depicting regional real estate loan quality, as well as our computations of a substantially higher than standard September 30, 2007 nonperforming asset ratio; very sizable holdings of one-to-four family mortgage loans; and greater than average combined investments in commercial real estate and construction loans, two categories that have, in the past, produced credit quality deterioration within the thrift industry. Consumer loans, which may carry more than usual default potential, should not have a substantial negative impact upon results for ensuing reporting periods. Excessive loan yield can also be an indicator of existing or future credit problems, and our loan review suggests that the institution has assumed a seemingly prudent position between credit risk and financial reward.
Our analytical methodology takes into account the quantity as well as the quality of capital, or net worth, and, as set forth above, we have determined, based upon our series of tests, that the institution demonstrates below standard capitalization.
This is not the whole story in bankrate which you should read. It is just a part of it. Thought you might be interested.
I got a Veribanc report in late Fall and moved accounts out of our old bank into a smaller regional bank that appeared on their star report. And now I find that their asset size is in the prime zone for CRE problems.
Reviewed the FDIC Institution report listed by RayontheFarm and it's a stone-cold @$@%% to read.
If I were to buy gold or silver coins I would put them in a very strong safe at home and NOT tell anybody about it. Or maybe the wife, if the marriage is okay. (One can hope it will stay that way).
Interesting. Let me just talk through your logic. In the event of a financial meltdown, your bags of coins will allow you to recapitalize through loans and move forward however you see fit. Whereas, those not so insured with pm's will be left with no collateral to borrow off.
I know bankers, and, the majority are clueless idiots. Strong language but candid and on point. Makes managing my money difficult, because I have to anticipate a lot of questionable moves.
thats my plan. just to be clear. i do own gold coins, silver rounds in my home safe. i also have GLD in a CS acct in Switzerland and a bunch of gold stocks.
but in terms of daily cash tranactions, if it really gets that bad i'm sure i could use that bullion as collateral in exchange for bazillions of dollars. why not when the daily price of gold in dollars is well known?
bankers don't have to be any better than clueless idiots. all they have to know how to do is leverage up to the hilt and buy into every reckless deal proposed. the bigger the better to get you into the too big to fail category. i could be an excellent banker.
seriously. the outrageousness of it all is that it is a well known, repeatable script for these reckless banks for over a hundred years. the Creature From Jekyll Island by G Edward Griffin goes over the history of the Fed and the banking system. there have been countless banking crises about every 10-15 years. banks have every incentive to push the system over the edge in the name of fees knowing full well that they can go to congress and plea for a bailut to save the system in the name of the little guy never once mentioning a return of those said fees.
i can just imagine banker junior bragging to banker senior about how he outdid him during his time at Citi. and then it goes on generation after generation of bankers having to get their hunk out of the system.
The WSJ article leaves the public with the false impression that FDIC only wants/needs 25 retirees to come back to work. This is completely false. It will need an army of employees and contractors to handle future bank falures just as it did in the 1980s. It has already re-hired at least 72 retired examiners and wants more to return. It is putting out bids for contractors on a regular basis and its budget has been increased to handle the 2008/09 impending expenses. I most definitely think the $52 billion fund will be depleted during this next crisis and Congress will have to either fund FDIC (with taxpayer money)or abolish it and start over with a new agency. Given the FDIC's very poor arrogant track record of regulation/supervision/risk analysis I hope it is abolished. I'm sure when we get past this next crisis a large part of the public will agree with me.
"Given the FDIC's very poor arrogant track record of regulation/supervision/risk analysis I hope it is abolished. I'm sure when we get past this next crisis a large part of the public will agree with me."
Preaching to the choir. Telling all your friends they're so lovely. Telling all model they're so beautiful is free.
See that money in your wallet? It will go to pay the extra 17,000 examiners. I like to make money, so I can bailout the USA.
I've got to get my hands on the "Creature from Jekyll Island" book. I'll insert into the stack after finishing "Crisis of the Old Order" by Schlesinger. Pages 64 - 73 make for interesting comparisons to present day (pre-Great Depression vs now).
But I'm wondering now about gold/PM, specifically the Chinese. I don't know how long of a timeframe is involved in saying, "hey, let's become the world leader in gold production"; at what point did the Chinese make that decision to pursue such a course of action? Is this a decision made to provide for a backstop in case of a collapse of the global fiat order? "Hey, Wu Ping, you got shellacked on the Hang Seng but don't worry, our wealth is in a hard PM. You're going to be alright".
If that is the case, then wouldn't gold be the way to go?
Man, if you think that the checkout times at Walmart are bad now, wait 'til they have the little scales for measuring PM weight.
idoc - the 'crisis' is broad and deep as we all know. There is also a hell of a lot we don't know. I think bank failures as a part of the crisis will go on for years just as they did in the 1980sand into the 90s. They will fail at a relatively slow rate this year (maybe 50 or so) because 1)FDIC cannot handle more than that with its current & projected staffing compliment for 2008/09 and 2)the public needs to get past the election(s). Each year after 2008 failures will increase for at least 3-4 years and there will be bank runs but hopefully not many just as there were in the 80s crisis. That is as far into the future as I care to predict with my FDIC/banking experience. I'll buy the beer if I'm wrong.
But what happened to "He who has the spices makes the rules?" and "He who has the whale oil makes the rules?" amd "He who has the Betamax makes the rules?"
50 is a slow rate? well they better get moving. lets see, 10 more months this yr means 5 starting in March. if we get that many we'll have a panic on our hands faster than u can say WTF.
You notice that gold has held value before, during and after the eras of spices and whale oil? I expect the same with the (relatively short) age of oil, too.
One of the things I like to point out is that governments want you to do as they say and not as they do. What do all governments have? Gold & guns.
Another nail in the coffin of CRE. GDP-wise, CRE may not rate quite as high as RRE, and the fraud may not have been there, but... banks are sooooo exposed to RE overall that the failures will be pervasive. What happens to CRE lending when a good portion of the banks are no longer around? It's not like we have a GSE for CRE.
Thanks for the explanation and the positive comment. Net Interest Margin is concept I am well familiar with. I just don't always get the acronyms right off the bat.
Calculated Risk is the most informed and illuminating forum on the Internet and you always provide insightful and valuable comments.
You are a lucky woman to have grown up near Peconic Bay. It is the most beautiful place on earth to me. My maternal grandmother had a summer bungalow on the North Fork in Laurel one house off the bay. I used to spend the most idyllic summers there sailing and swimming.
I live in San Francisco now and hope to retire to the North Fork wine country in a few years and sail, swim and sip wine until my dying day.
I'm sure you must have a similar catalogue of sweet memories.
tj&b, I have to believe CRE is going to be a bigger issue than CR believes at this point. I saw too much of this shit in the 80s and early 90s. My gut tells me this is big. I'll buy the beer with CR's tip jar money if I'm wrong.
I was a customer with NetBank when it failed. The accounts were transferred seamlessly over to ING Direct's control when the failure was announced, and the accounts were then turned into ING Direct accounts a few months later. The only real hassle was having to change EFT information for bills and direct deposit, but other than that it was no big deal.
I think we should issue George Bush Memorial stamps, which will increase the cost of a 41 cent stamp to $4.10 and then just pay a subprime tax to be used for bank bail outs and synthetic derivative casino bets that didn't hit the jackpot; kinda like a reverse lotto. Instead of people betting a dollar to win a few million, you give the Fed money to give back to the banking casinos/mafia.
I think this could be extended to a Paypal thing where emails would also use GWB STSs (George Bush Subprime Tax Stamps) and taken to an extreme derivative, one could tax posts pasted into haloscans like this, and then you could use free speech to voice your opinion for $4.10 per bitch.
CK, silver and gold are real money. That sums it up. No, you don't get interest on them. But they will preserve your wealth over not just centuries, but millenia. And, if you are smart enough to buy them while they are price-depressed (as they are now, while everybody still worships Moloch), they will turn a tidy profit.
Right now silver is probably a better play for several reasons, despite the fact that it is an industrial metal. I expect it to hit $100./oz (nomimal terms), before 2012. But I've no argument with gold, Eagles or Maple Leafs.
With junk silver, you don't pay attention to "numismatic" value. Any collectible coins have been picked out of the bag or half-bag. What's left is 90% silver US coins (pre-1965), sold at (now) about 13X face value. So, a thousand dollars face value of dimes/ quarters/halves and dollars costs about 13K. (Divide spot price by about 1.4 to get the tradeable price.)
Yes, you pay a premium above actual spot price, just as with gold. It isn't mean to be day-traded. But if your great-great-great grandchildren find it under your floorboards two centuries from now, it will be worth to them about what it is to you now.
Unlike greenbacks.
Disclaimer: I am not a professional financial advisor. Just a J6P.
"That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
Chicago Dude | 02.25.08 - 11:36 pm |"
Not to call you a liar, but are you sure you have the right house? I can't believe for a minute the Secret Service doesn't know everything about every property within 5 miles of Obama's house.
My father lives a bit farther away than that from W's ranch in Crawford and they paid him and all his neighbors a visit very early in the 1999 campaign.
before you get it, just know it is a major conspiracy theory. I had no idea until I read the book...
oh wait, I probably only made it through like 50% of it because by the end it was just to rediculous.
per that book, the Fed is the cause of everything including WW2, and in the end the book is more about all the "elites" wanting a "New World Order" than the Fed.
I lost interest when he delved into how the Fed engineers every war in order to bring a "socialist" New World Order. (I never understood what he means when he says "socialist" like 1000 times)
anyway, just so you know, the book is less about the Fed, and more about a conspiricay of powerful secret elite families (Jewish of course) that are engineering a world wide socialist New World Order.
"That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
Chicago Dude | 02.25.08 - 11:36 pm |"
Not to call you a liar, but are you sure you have the right house? I can't believe for a minute the Secret Service doesn't know everything about every property within 5 miles of Obama's house.
No, CD's got it within a block or so. I'm from Chi too, have kin not far away from this Oakenwald house, and have been watching real estate in that 'hood off and on for a few years.
I wonder if the deal on the house in the article wasn't a pump scheme; unlike the part of North Kenwood where the Obamas live, Oakenwald is spottier, and the houses are smaller, often more like real cottages, and generally in less good condition, though there are some real diamonds in the rough. It's a market that would probably have to be made, whereas the other part of NK has been quietly desirable for a long time.
As to Big Foot, I believe the Current Occupant is rather notorious for the size of his compared to any predecessor. Could be that some of what you've observed is not really SOP.
I have a theory on what happened Friday into the close for you conspiracy fans out there. Say the Working Group had advance notice of (1) MBIA cutting its dividend after the close (2) a slew of bad news from the banks this week (3) a pile of economic news coming out, none of it good and (4) the market was steadily down all day Friday and finally (5) a monline downgrade on top of all that would have triggered a crash this week.
What do they do? The call goes something like this: "Hey, S&P, look there is going to be criminal charges and you are going down, but if you do this for us and take one for the team we'll keep that in mind when the trials start. All we need you to do is write a bogus rating. You've been doing it for years, what's one more? Yeah, Ambac. It's gotta stay AAA. Hey we get to crush all those damned unpatriotic shorts at the same time..."
So for all of you that argue that all the bad news has now been priced in, I would argue the contrary - now that Ambac has its AAA rating, which is the only thing anyone was really worrying about, all the GOOD news is priced in. Now, this week we get the bank write downs and bad econominc news, and the Working Group succeeded in avoiding the crash and we get instead a nice gentle down slope.
It looks like 91 vacancies are opening up, a total of about 223 current employees. So that would be a 40% increase in employment just for resolution and receivership department.
Are they just going to hire the 25 employees and leave the rest vacant?! What is going on here.
CR or Tanta:
If the courts are refusing many foreclosures because they can't find the holder of the note, then would it not follow that buying a home today could be a huge risk? What if the seller can't prove he really satisfied the right note holder when he passed the house to a new buyer? Something is fishy here. See article: Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish - Bloomberg.com
Credit Suisse chief calls the end of the sub-prime crisis
Bob Parker, vice-chairman of Credit Suisse Asset Management, has told his firm's clients the worst of the sub-prime mortgage crisis, described as one of the worst financial disasters of the last half a century, will be over within weeks.
Whew, that's really good news. OTOH, now we move on to the Alt A crisis, the Option Arm crisis, the credit card crisis, the variable rate whatever crisis. Oh, and the little matter of foreclosures and jingle mail. Good thing subprime at least is over.
U.S. Central Federal Credit Union, the non-profit company that invests on behalf of 8,400 local lenders, lost its AAA rating from Standard & Poor's after reporting a $760 million drop in the value of subprime-infected securities.
Re: Etrade/Fidelity/Brokerage failures
Brokerage accounts are covered by SIPC insurance (for what that's worth). There are exceptions if you've got a margin account and your shares have been borrowed for shorting.
IMHO, if it keeps you up at night move the funds to a large brokerage taht should weather the storm. If they start to go down, there really isn't any place to hide.
Beyond that, you could see if your brokerage offers direct registration (PITA):
dfb writes:
Any suggestions on how to determine the health of a specific bank, credit union, or S&L?
The FFIEC makes available the Uniform Bank Performance Report for each bank on a quarterly basis. These reports are used by examiners at the very beginning of the examination process to identify trends and specific areas of the bank that require scrutiny. You will find a variety of information available, including ratio analysis and comparisons to peer groups. You can select various time periods to display.
This is an excellent resource if one is interested in just checking on one's local bank or researching other institutions for weaknesses or strengths.
Xregul8r,
I was looking at a report for my Credit Union--Star One in CA (ncua.gov). Near the bottom it said, "Well Capitalized". Hard to tell, though, if they have assets in risky stuff. To the untrained eye, it looks like number salad. I'm just hoping it's safe.
I've been out of the CU business for many years, and it has really changed. If you search around on NCUA.gov, you will probably find some definitions of what "well capitalized" and other classifications mean--it is probably X% or greater capital to total assets, or something like that. Then you have to determine what counts as capital.
> Hard to tell, though, if they have assets in risky stuff.
Aye, there's the rub. The perennial problem in analyzing any financial institution's balance sheet. There is never any way to know for sure what horrors lie within the loan portfolio. It is easy even for the "professionals" to get burned, even after having had the opportunity to do due diligence. Examiners only look at a fraction of loans--there's no way they can uncover all the problems. They place ever more reliance on internal/external audit and sound risk management practices.
Xregul8r,
I searched NCUA.gov and here is what I found:
Star One net worth: 11.93%.
Under current law an insured credit union is:
well capitalized if it has a net worth ratio of not less than 7%. Falling below 7% triggers an earnings retention requirement and involvement with NCUA that most insured credit unions would like to avoid;
adequately capitalized if it has a net worth ratio of not less than 6%. Falling below 6% requires the credit union to produce a net worth
restoration plan and additional regulatory involvement;
undercapitalized if net worth is below 6%. With this status comes
restrictions on asset growth and member business loans;
significantly undercapitalized if net worth is less than 4%;
critically undercapitalized if the net worth ratio is less than 2%. Here the NCUA Board has 90-days to take action, such as conserving, liquidating or merging the credit union.
CalculatedRisk writes:
MiTurn, the FDIC didn't release an emerging risk report at the end of 2007.
the fdic ceased publishing this document and i know that they are glad of it. they have been cheerleaders as the bubble grew. they still are in denial about the impending storm. give me a break about their solution -- hire back 25 retired liquidators on a temporary basis. they do not have the skill sets or the number of examiners needed to perform their core mission. despite this issue and the major morale problems at the agnecy, bair continues to rant at servicers to provide forbearance to every deadbeat homedebtor.
Mike--
I've pretty much forgotten how CU balance sheets are structured--back when I was involved there were "membership shares" and of course retained earnings or the CU equivalent thereof. CU assets were just car and personal loans--only a few of the biggest were tiptoeing into the mortgage market. This was in the mid-1980s.
Back then, CUs could fail by making a lot of crappy personal or car loans, or if their main sponsor closed up shop and laid off the field of membership. Now, with the relaxation of the common bond requirement and the proliferation of "community" charters, not to mention offering as wide an array of products as banks, I would think CUs have as much opportunity to blow up as any bank.
Just make sure you don't exceed the NCUA insurance limits and you will be OK.
I'm very much against what the CU business has evolved into. They want to do everything a bank does but be tax-exempt. Swell. A lot of CUs are going to regret diversifying into so many new lines of business.
Of course, a lot of banks are going to regret being in the banking business, so fair's fair.
Thx Xregul8r. This is very helpful. I think I'll drag some financier and auditor friends into digging into how to better determine CU health or find someone who might be more versed in the CU industry. From a first glance at Star One, it looks in better shape, but it has a larger percentage of its deposits and worth tied up in mortgages and other loans than my CU does.
My CU has a net worth ratio of: 8.39% It has fluctuated between 7.11 and 9% over the past four years.
My CU has additional share/deposit insurance with American Share Insurance. Can that even be trusted?
What puts shivers up and down my spine is that I'm in California where there are likely a lot of bad loans. There are a lot of banks and CUs that made poor loan decisions and the question is which pile will stink the worst at the end of the day.
This is just peachy!
A storm is comin'. At least somebody is getting ready for it.
Maybe they need to reinstate the draft.
Is it not possible to get more current numbers?
Maybe they need to reinstate the draft.
Tantaleeza Rice appointed secretary of defense.
MiTurn, the FDIC didn't release an emerging risk report at the end of 2007. So these are still the most current numbers - and I thought the failure to release the report spoke volumes (FFIDC and I discussed this in the comments back then).
Best to all.
I have a savings account at AmTrust, an Ohio bank. They recently offered a $50 bonus if I would make at least 3 automated monthly deposits of at least $100 each. That's quite the effective interest rate. Today I received an offer of $25 if I would roll over a pair of (not very large) CDs.
My bet is that AmTrust is on the FDIC's death--er, watch list.
Do I make sure that I'm in first place in the inevitable bank run, or do I trust to the FDIC to replace my money in the one working day that it mentions on its web site....
Thanks CR, but your comments make the whole things seem even scarier.
CR, You are usually very good about explaining acronyms. What is a NIM? Or, am I a NIMrod for not knowing?
Thanks,
You gotta love this:
"Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside"
This house was a steal -- chicagotribune.com
Cheers,
This just in,
More banks may fail,
Bears poop in the woods,
The Pope is still Catholic,
It's colder in winter than summer.
More news at 11.
Cheers,
Misean - so they didn't bury him in The Meadowlands after all - dumped him in Chicago instead. Works for me...
dryfly,
LOL
I guess that's why the Mythbusters didn't find him either. They scanned the meadowlands with ground penetrating radar.
Cheers,
This is scary. I wonder how long it would take for one of ( or all ) of the top banks to need the FDIC. I believe the article said they had $52 billion. My CDs come due on 07-16-08. I have my money in one of the bigger banks. I sure hope I get it back with the interest! I started putting large amounts of cash in a safe the past couple of months. Seems to me the FDIC could burn thru that $52 billion very fast. If I recall correctly it could also take a long time to get it from them.
Peconic Bay--not only did I grow up there as a Kid, I particularly appreciate your insigtful comments.
Net interest margin (NIM) the spread between loan rates and deposit rates
falls when interest rates rise, because interest rates on deposits adjust more quickly than interest rates on loans. Further, when interest rates rise, the economic value of longer-term instruments (assets) falls by more than the economic value of shorter-
term instruments (liabilities), thus reducing the banks capital. Today I think IB's, national banks and the Fed are trying to create the reverse. They are not passing through the interst rate reductions on the consummer and corporate level. Thus widening the spread. But pushing on a string is a problem.
Seems to me the FDIC could burn thru that $52 billion very fast.
Wink, wink... there's more where that came from... nudge, nudge.
No problem. Dubai, China and Warren Buffet are ready and willing to infuse cash wherever cash is needed.
Don't worry. There's only a fifty percent probability of a recession. And if there is a recession, it'll be a short, shallow one. And if this theoretical recession occurs, at least the CRE segment of the economy won't take much of a hit.
This also means retail shouldn't get hit too badly. This also implies that consumer spending will largely continue as-is.
I've recently updated my four or five - variable economic model, so I couldn't possibly be wrong on this.
Any suggestions on how to determine the health of a specific bank, credit union, or S&L? Does NCUA or the S&L agency release similar statistics or does FDIC stats combine all similar institutions?
You've mentioned the monoline insurance companies' flatlining quite a bit. Do you know about the health of private bank deposit insurers such as American Share Insurance which insures credit union deposits? How much pressure can they withstand?
This isn't good. Failing banks are never a good thing.
This would be step no. 6 of Nouriel Roubini's 12-step scenario of a global financial meltdown.
Deal Junkie: A Sobering 12-Step Scenario
I have a headache.
S&L all over again...except the US money is now funny. Oh, the humanity! Damn them all! Damn them all to hell! D'ohhhh!
Time for an Everclear 'tini.
My wife (Japanese) and I have a place in Kyoto Japan. Weve had money in a postal account (.25% interest) there for about 17 years. Ive been on her ass to do something with it. She always tells me we dont need to worry about exchanging money when we're there. I feel a lot better now knowing its there if we were to need to get the hell out of the US for an extended period of time. CYA.
Prediction: Dow futures will be up 100 pts on this news!
From the new post on Kunstler's blog:
This time around we have more to fear than fear itself. The banking executives, government officials, and candidates for president are not doing the nation a service by concealing and ignoring our losses. Finance, as the driver of an economy, is finished, but the deployment of capital is still an indispensable arm of a real economy. Sooner or later we'll get back to money that stands for something and banks that function as credible repositories of wealth. But we haven't even started down the path to that place, and the longer we pretend that we don't have to go there, the worse the journey will be.
I do wish CR would include his views on the sidebar here.
Very good question about the credit unions. Anyone???
Also, I worry about my investments in my online brokerage firms. They are, after all, sitting on billions of dollar of margin which could unwind very fast. Also, online brokerage houses have become online banks with significant mortgage lending. And since the FDIC doesn NOT insure equities, will my equity investments in TDameritrade, Scottrade and Etrade be safe?
Etrade is already wobbly. Seriously, we're talking about my future and my family's hard earned wealth being taken away. Poof.
"Seriously, we're talking about my future and my family's hard earned wealth being taken away. Poof." -- SK
As long as it's your family's hard earned wealth, easy come, easy go. And, if you are worried about income, may I suggest prostitution, drug enterprises, or selling non-vital organs on the internet. Oh, yes, I almost forgot. Whatever you do, don't do what they do or you will be like them.
Elvis,
Sign me up for one of those.
SK,
I have a pittance in my ETrade account. What I'd loose in Vegas if I totally f'd up.
Get the important cash out now.
Cheers,
Any suggestions on how to determine the health of a specific bank, credit union, or S&L?
For the health of a specific FDIC insured bank, you can look at the CALL report. Those can be pulled thru the FDIC site (and they are lengthy and require much reading and interpretation).
FDIC: Institution Directory
Would be nice if someone could provide a simplified guide to what parts are more important.
"Would be nice if someone could provide a simplified guide to what parts are more important."
Well, for woman parts, that is easy...First, remember that all that is silicon is not bad...
Misean,
Seriously, you recommend pulling money (stock equity) out of Etrade? I can liquidate the portfolio any time, but I'd hate to do that.
And what about TDameritrade? And Scottrade? I own equities on all three.
Short of taking delivery of my stock certificates, I don't know what else to do. I've actually investigaed doing so. It has a termendous downside; namely, you cannot sell an equity using your paper certificate in any timely fashion. A stock could go under, and I'd be locked out a week by the paperwork.
I don NOT want to put everything into cash. I'm already invested way to heavily in gold and silver stocks and ETF's. Short of buying silver and gold eagles and putting them in a safe deposit box (inside a failing bank!) what the hell do you do?
This shit keeps me awake at night.
SK,buy gold and a Bullet mold,cast bullets,spray with rustoleum gray,and load in .44 Mag cases.substitute cocaine for gunpowder to avert possible accidents.
About bank soundness... bankrate.com has what they call Safe & Sound Ratings. I don't know if they are even current, but here you go...
Bankrate.com Safe & Sound (tm): Bankrate free rating system for banks, thrifts, credit unions
SK writes:
Also, I worry about my investments in my online brokerage firms.
That makes two of us. I use Schwab and don't have any positions at the moment. The Schwab Bank is FDIC insured but pays less than 1%. I keep most of my trading cash in a SWVXX fund (@ 3.45% this week) When I need it to pay for trades I dont need to sell the fund till 2 days after I buy/short a stock. But this isn't FDIC insured. I have a headache now also.
I think Ive been doing too much reading about all this. I hope Im just being over cautious. Hmmmm, maybe not.
Detailed financial information on all federal and state chartered credit unions can be found at ncua.gov in the Credit Union Data area. Credit Unions, as a general rule, are much better capitalized than banks and the NCUSIF fund is in much better shape than the FDIC (NCUSIF is the credit union equivalent of the FDIC). There will be credit union failures this year and next, but the credit union system overall is quite strong. The biggest exposure for credit unions is probably HELOC's in areas that are seeing steep price declines. But most credit unions, although not all, never went above 80% LTV. In general, most credit unions actually stayed with more "traditional" lending standards over the last few years. If I had a substantial amount of money in a credit union I'd take a look at their numbers at ncua.gov. I'd have no worries about amounts within the insurance limit.
SK,
I know your pain man. I have a lot of PM in a safe. Not much is banks. It sucks, but if you're conservative like me you have to get out.
Cheers,
With SA mines shutting down, IMF gold sales are trotted out right on cue... what utter BS. Chinese are going to be very happy with us round eyes and our stupidity.
anybody know of any danger readings on Fidelity Investments?
Stuart
i've read that IMF gold sales will never happen. they're trying to jawbone down the price of gold.
I got this link on here a while back. It's a good one for checking Funds.
Institutional Risk Analytics - SEC Filings Survey - Records of Mutual Fund Portfolio Holdings for 2009
Hey let's just bring back regulatory capital and put the failures off for a few years. While we're at it, let's also come up with some new and innovative ways for banks to invest their funds so they can "grow" their way out of their problems just like the S&L's did. lol
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside"
That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
idoc,
I am believe that IMF sales are BS too. We'll see, but they don't really have a lot to sell.
Cheers,
Lord, please let the failures be among the many bank shorts i own. (shameless)
ot only are they bluffing, they are stupid to even pretend. the Brits are about to hang Gordon Brown for selling all their gold.
Where's my gosh darn pony!!!!
Cheers,
I understand that Nordstrom's is running a line of designer ponies as they push for the younger market.
idoc,
That sale was when I bought...a lot.
What else have I to say.
Cheers,
It's a sick world we live in. I get pony email. It's not nice.
Catch you all tomorrow.
Cheers,
Short of buying silver and gold eagles and putting them in a safe deposit box (inside a failing bank!) what the hell do you do?
What do you mean, "short of?"
Why haven't you done exactly that? Or buried them in your back yard?
I don't get it. For ten years I've been telling people to drop by their nearest coin or pawn shop and buy up all the junk silver coins they can get their hands on. Nobody has done as I advised. Not one. Meanwhile, silver has gone up 500% in value.
Misean
u were so kind to take it off their hands in the 200's. what a kind soul!!! beautiful, just beautiful!!
Idoc,
Gold Bugs Could Call IMF’s Bluff
It is time for my 3 minutes of seriousness a day. My sense is fear is being overtaken by panic. Fear can be somewhat rational. Panic is completely irrational. When irrational people rule, it becomes difficult to figure anything out. I like PMs, but gold seems high on a historical graph while silver could be a bargain (or way overvalued). Shorting seems like the best bet, but you've got a bumbling gov't that can cause problems. Cash seems like a good position in the ST, but the ST soon starts to get longer, and you lose there. What to do? My best guess is the safest investment is buying life insurance on feeder cattle, but what do I know?
I bought some silver maple leafs just a month ago at 16.80 a coin. Now at 18.50 a coin. I wanted to invest more, but we'll see, since its gone up so fast.
Everyone needs their buy/sell price for metals.
idoc,
I try. There's only so much in the kiddy. But if you want to sell assets well below their price...I'll take it.
unrealist,
back at ya.
Cheers,
Misean, so what do you get for a kidney?
Stuart
we're all piranhas now.
"Misean, so what do you get for a kidney?"
In Vegas, a drunken night with a prostitute.
so is there some nice, concise list of all the at risk banks? FFDIC?
idoc,
Yes, all of them. And don't let anyone try to convince you of anything else. (Well, Countrywide/BOA is good, but it is an exception.)
Elvis
with your moniker and talk about Vegas, prostitutes and silicone you have me wonderin'
Misean,
In all seriousness, what's your plan with the metal in the safe? To whom will you sell? How do you forsee the eventual selling of your gold play out?
And buying bags of junk silver coins seems highly risky. I could dump the bag on a table and not know what the hell I'm looking at or if it were of true value. Coin dealers don't have the best reputation.
And what's a reasonable premium above the day's stated .oz rate?
Maybe I'm being stupid, but buying physical gold/silver just seems like a big leap most people will not make.
idoc,
I died on the toilet. You should wonder.
SK,
PM makes more sense that corn ethanol and everybody is behind that.
Elvis:
FWIW, I'm just continuing to work through the logic of what to do in light of the train I see headed down this tunnel.
PM...Gold is high and the ratio between Silver and Gold is way out of balance from the historic norm (presently 50X plus vs about 16). Assuming that that ratio also reverts to it's normal level, either silver has to skyrocket or gold has to tank. Given that silver is also an industrial metal and the global economy takes a major lump, the demand for silver from industrial users will drop; will the demand from those who see silver as a store of value offset? In the west, demand will probably rise as most simply will not be able to afford gold.
I've been curious as to the Chinese gub'mint's stance on allowing its citizenry to afford gold. I believe the arguments that we are not decoupled from the world - hell, I was in Walmart last week - so their financial system will probably take a major hit in the future. With the loss of wealth in the collapse of those markets, will their citizens move (or be able to move) into gold?
If so, I'd anticipate an aggregate rise in gold value. Not to mention that the Chinese don't do national level things on a whim, i.e. pushing gold mining to such an extent that they overtake S Africa as the #1 global producer of gold. They wouldn't push this stuff just to see all that investment collapse. I would anticipate a spike in PM before a collapse, so the question is when to get out of that. But into what?
All that said...we've scrapped plans on vacation this summer. First the wife's chance to go to Russia w/eldest child, then the rental house at the beach for everybody, including extended family.
SK
daily prices and premiums are listed on Kitco.com. i don't necessarily see myself using the coins per say but using them as collateral for all those dollars i could borrow in the future.
$52.4 Billion?
$52.4 Billion?
$52.4 Billion?
According to the WSJ, the FDIC only had $52.4 Billion in reserves for bank failures at the end of 2007.
Based on progressively deteriorating estimates, Citi could lose that much just by itself. What will be left for the rest of the country?
Is there anybody thinking anymore? Where is that Galt fellow?
CT: Here is what bankrate says about AmTrust in Ohio:
The institution reveals, as previously stated, questionable asset quality. That conclusion incorporates our analysis of data depicting regional real estate loan quality, as well as our computations of a substantially higher than standard September 30, 2007 nonperforming asset ratio; very sizable holdings of one-to-four family mortgage loans; and greater than average combined investments in commercial real estate and construction loans, two categories that have, in the past, produced credit quality deterioration within the thrift industry. Consumer loans, which may carry more than usual default potential, should not have a substantial negative impact upon results for ensuing reporting periods. Excessive loan yield can also be an indicator of existing or future credit problems, and our loan review suggests that the institution has assumed a seemingly prudent position between credit risk and financial reward.
Our analytical methodology takes into account the quantity as well as the quality of capital, or net worth, and, as set forth above, we have determined, based upon our series of tests, that the institution demonstrates below standard capitalization.
This is not the whole story in bankrate which you should read. It is just a part of it. Thought you might be interested.
idoc:
And also FWIW.
I got a Veribanc report in late Fall and moved accounts out of our old bank into a smaller regional bank that appeared on their star report. And now I find that their asset size is in the prime zone for CRE problems.
Reviewed the FDIC Institution report listed by RayontheFarm and it's a stone-cold @$@%% to read.
Lovely. Sheiss. Merde. Mierta.
If I were to buy gold or silver coins I would put them in a very strong safe at home and NOT tell anybody about it. Or maybe the wife, if the marriage is okay. (One can hope it will stay that way).
idoc,
Interesting. Let me just talk through your logic. In the event of a financial meltdown, your bags of coins will allow you to recapitalize through loans and move forward however you see fit. Whereas, those not so insured with pm's will be left with no collateral to borrow off.
Is this right?
Thanks.
SK
I know bankers, and, the majority are clueless idiots. Strong language but candid and on point. Makes managing my money difficult, because I have to anticipate a lot of questionable moves.
This is what is my primary concern about PMs, what is China's underground reserve? Does anyone know?
SK
thats my plan. just to be clear. i do own gold coins, silver rounds in my home safe. i also have GLD in a CS acct in Switzerland and a bunch of gold stocks.
but in terms of daily cash tranactions, if it really gets that bad i'm sure i could use that bullion as collateral in exchange for bazillions of dollars. why not when the daily price of gold in dollars is well known?
bankers don't have to be any better than clueless idiots. all they have to know how to do is leverage up to the hilt and buy into every reckless deal proposed. the bigger the better to get you into the too big to fail category. i could be an excellent banker.
idoc,
Sometimes it is better to let a patient go blind than see his financial condition.
seriously. the outrageousness of it all is that it is a well known, repeatable script for these reckless banks for over a hundred years. the Creature From Jekyll Island by G Edward Griffin goes over the history of the Fed and the banking system. there have been countless banking crises about every 10-15 years. banks have every incentive to push the system over the edge in the name of fees knowing full well that they can go to congress and plea for a bailut to save the system in the name of the little guy never once mentioning a return of those said fees.
i can just imagine banker junior bragging to banker senior about how he outdid him during his time at Citi. and then it goes on generation after generation of bankers having to get their hunk out of the system.
idoc,
The only difference between a banker and a baker is the baker has dough.
The WSJ article leaves the public with the false impression that FDIC only wants/needs 25 retirees to come back to work. This is completely false. It will need an army of employees and contractors to handle future bank falures just as it did in the 1980s. It has already re-hired at least 72 retired examiners and wants more to return. It is putting out bids for contractors on a regular basis and its budget has been increased to handle the 2008/09 impending expenses. I most definitely think the $52 billion fund will be depleted during this next crisis and Congress will have to either fund FDIC (with taxpayer money)or abolish it and start over with a new agency. Given the FDIC's very poor arrogant track record of regulation/supervision/risk analysis I hope it is abolished. I'm sure when we get past this next crisis a large part of the public will agree with me.
FFDIC
do u have any time projections as to when this crisis will hit?
"Given the FDIC's very poor arrogant track record of regulation/supervision/risk analysis I hope it is abolished. I'm sure when we get past this next crisis a large part of the public will agree with me."
Preaching to the choir. Telling all your friends they're so lovely. Telling all model they're so beautiful is free.
See that money in your wallet? It will go to pay the extra 17,000 examiners. I like to make money, so I can bailout the USA.
I've got to get my hands on the "Creature from Jekyll Island" book. I'll insert into the stack after finishing "Crisis of the Old Order" by Schlesinger. Pages 64 - 73 make for interesting comparisons to present day (pre-Great Depression vs now).
But I'm wondering now about gold/PM, specifically the Chinese. I don't know how long of a timeframe is involved in saying, "hey, let's become the world leader in gold production"; at what point did the Chinese make that decision to pursue such a course of action? Is this a decision made to provide for a backstop in case of a collapse of the global fiat order? "Hey, Wu Ping, you got shellacked on the Hang Seng but don't worry, our wealth is in a hard PM. You're going to be alright".
If that is the case, then wouldn't gold be the way to go?
Man, if you think that the checkout times at Walmart are bad now, wait 'til they have the little scales for measuring PM weight.
We are going back to the 5% haves and the 95% have-nots. Anybody want to sweep my chimney or nanny my kids?
Just let the kids sweep the chimney. How very Victorian.
Elvis,
Remember the "golden rule"? He who has the gold makes the rules!
As long as I don't have to. I made Santa do it one year, and he broke his neck. Just don't tell your kids it is an Imposter Santa.
idoc - the 'crisis' is broad and deep as we all know. There is also a hell of a lot we don't know. I think bank failures as a part of the crisis will go on for years just as they did in the 1980sand into the 90s. They will fail at a relatively slow rate this year (maybe 50 or so) because 1)FDIC cannot handle more than that with its current & projected staffing compliment for 2008/09 and 2)the public needs to get past the election(s). Each year after 2008 failures will increase for at least 3-4 years and there will be bank runs but hopefully not many just as there were in the 80s crisis. That is as far into the future as I care to predict with my FDIC/banking experience. I'll buy the beer if I'm wrong.
But what happened to "He who has the spices makes the rules?" and "He who has the whale oil makes the rules?" amd "He who has the Betamax makes the rules?"
Oh, yes, now it is "He who has the Patriot Act makes the rules"...Too bad the coke affected his brain...
50 is a slow rate? well they better get moving. lets see, 10 more months this yr means 5 starting in March. if we get that many we'll have a panic on our hands faster than u can say WTF.
OK. Wafer Tobacco Fastidious. Did it happen?
Lord, please make those bank failures show up on my list of shorts. (shameless).
oh, i said that already.
good nite.
FFDIC:
And how many pairs of glasses did you ruin trying to read that verklempt FDIC Institution Report linked earlier?
Good God.
Elvis,
You notice that gold has held value before, during and after the eras of spices and whale oil? I expect the same with the (relatively short) age of oil, too.
One of the things I like to point out is that governments want you to do as they say and not as they do. What do all governments have? Gold & guns.
Knight Rider to you, David Hasselhoff. Please remember to comb the chest hair.
tj,
Trust me, I know.
homedad43 - you should see FDIC's relocation and travel report requirements!
"Given the FDIC's very poor arrogant track record"
Oh great...more turds...
I'm going to sleep in my oxygen chamber now.
CR,
Another nail in the coffin of CRE. GDP-wise, CRE may not rate quite as high as RRE, and the fraud may not have been there, but... banks are sooooo exposed to RE overall that the failures will be pervasive. What happens to CRE lending when a good portion of the banks are no longer around? It's not like we have a GSE for CRE.
Lawyer Liz,
Thanks for the explanation and the positive comment. Net Interest Margin is concept I am well familiar with. I just don't always get the acronyms right off the bat.
Calculated Risk is the most informed and illuminating forum on the Internet and you always provide insightful and valuable comments.
You are a lucky woman to have grown up near Peconic Bay. It is the most beautiful place on earth to me. My maternal grandmother had a summer bungalow on the North Fork in Laurel one house off the bay. I used to spend the most idyllic summers there sailing and swimming.
I live in San Francisco now and hope to retire to the North Fork wine country in a few years and sail, swim and sip wine until my dying day.
I'm sure you must have a similar catalogue of sweet memories.
Thanks,
tj&b, I have to believe CRE is going to be a bigger issue than CR believes at this point. I saw too much of this shit in the 80s and early 90s. My gut tells me this is big. I'll buy the beer with CR's tip jar money if I'm wrong.
WHAT HAPPENED TO THE NIKKEI?
Opened up 100+ and bounced around +70 or so all day, but then plunged down to -107 going into the close. WTH???
Fortune: Here come more financiers' writedowns
http://money.cnn.com/2008/02/25/markets/barr_writedowns.fortune/index.htm?postversion=2008022514
I was a customer with NetBank when it failed. The accounts were transferred seamlessly over to ING Direct's control when the failure was announced, and the accounts were then turned into ING Direct accounts a few months later. The only real hassle was having to change EFT information for bills and direct deposit, but other than that it was no big deal.
What is with Fidelity? Don't these genius CEOs have any idea what is going on in the credit markets?
Page not found- msnbc.com
Really bad news! Prozac does not work! Tanta is going to be in such a bad mood. Get strong coffee everybody in the morning. ALERT! ALERT! I'm not even going to log in.
Prozac, used by 40m people, does not work say scientists |
Society |
The Guardian
idoc,
McHugh's calling this a bullish break out. Do you concur?
FDIC Chair Bair announces 2007 4th Q earnings on Tuesday...
On Deadline: Breaking News & Must-Read Stories
US FDIC's Bair: banks need traditional analysis:
US FDIC's Bair: banks need traditional analysis
| Reuters
FDIC Chair Bair: More Mortgage Transparency Needed
FDIC Chair: More Transparency Needed - CNBC
FDIC Chair Bair warns Silicon Valley isn't immune to mortgage woes...
San Francisco Business Times: Not Found
I do have a solution for this subprime mess!
I think we should issue George Bush Memorial stamps, which will increase the cost of a 41 cent stamp to $4.10 and then just pay a subprime tax to be used for bank bail outs and synthetic derivative casino bets that didn't hit the jackpot; kinda like a reverse lotto. Instead of people betting a dollar to win a few million, you give the Fed money to give back to the banking casinos/mafia.
I think this could be extended to a Paypal thing where emails would also use GWB STSs (George Bush Subprime Tax Stamps) and taken to an extreme derivative, one could tax posts pasted into haloscans like this, and then you could use free speech to voice your opinion for $4.10 per bitch.
What think?
CK, silver and gold are real money. That sums it up. No, you don't get interest on them. But they will preserve your wealth over not just centuries, but millenia. And, if you are smart enough to buy them while they are price-depressed (as they are now, while everybody still worships Moloch), they will turn a tidy profit.
Right now silver is probably a better play for several reasons, despite the fact that it is an industrial metal. I expect it to hit $100./oz (nomimal terms), before 2012. But I've no argument with gold, Eagles or Maple Leafs.
With junk silver, you don't pay attention to "numismatic" value. Any collectible coins have been picked out of the bag or half-bag. What's left is 90% silver US coins (pre-1965), sold at (now) about 13X face value. So, a thousand dollars face value of dimes/ quarters/halves and dollars costs about 13K. (Divide spot price by about 1.4 to get the tradeable price.)
Yes, you pay a premium above actual spot price, just as with gold. It isn't mean to be day-traded. But if your great-great-great grandchildren find it under your floorboards two centuries from now, it will be worth to them about what it is to you now.
Unlike greenbacks.
Disclaimer: I am not a professional financial advisor. Just a J6P.
"That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
Chicago Dude | 02.25.08 - 11:36 pm |"
Not to call you a liar, but are you sure you have the right house? I can't believe for a minute the Secret Service doesn't know everything about every property within 5 miles of Obama's house.
My father lives a bit farther away than that from W's ranch in Crawford and they paid him and all his neighbors a visit very early in the 1999 campaign.
"Topher writes:
It's a sick world we live in. I get pony email. It's not nice.
Topher | 02.25.08 - 11:43 pm |"
Perhaps you just identified the next bubble: pony porn...
"Creature from Jekyll Island"
worst. book. ever.
before you get it, just know it is a major conspiracy theory. I had no idea until I read the book...
oh wait, I probably only made it through like 50% of it because by the end it was just to rediculous.
per that book, the Fed is the cause of everything including WW2, and in the end the book is more about all the "elites" wanting a "New World Order" than the Fed.
I lost interest when he delved into how the Fed engineers every war in order to bring a "socialist" New World Order. (I never understood what he means when he says "socialist" like 1000 times)
anyway, just so you know, the book is less about the Fed, and more about a conspiricay of powerful secret elite families (Jewish of course) that are engineering a world wide socialist New World Order.
Just my 2cents.
"That house is less than a mile from Obama's mansion. I bet Hillary has a few theories.
Chicago Dude | 02.25.08 - 11:36 pm |"
Not to call you a liar, but are you sure you have the right house? I can't believe for a minute the Secret Service doesn't know everything about every property within 5 miles of Obama's house.
No, CD's got it within a block or so. I'm from Chi too, have kin not far away from this Oakenwald house, and have been watching real estate in that 'hood off and on for a few years.
I wonder if the deal on the house in the article wasn't a pump scheme; unlike the part of North Kenwood where the Obamas live, Oakenwald is spottier, and the houses are smaller, often more like real cottages, and generally in less good condition, though there are some real diamonds in the rough. It's a market that would probably have to be made, whereas the other part of NK has been quietly desirable for a long time.
As to Big Foot, I believe the Current Occupant is rather notorious for the size of his compared to any predecessor. Could be that some of what you've observed is not really SOP.
I have a theory on what happened Friday into the close for you conspiracy fans out there. Say the Working Group had advance notice of (1) MBIA cutting its dividend after the close (2) a slew of bad news from the banks this week (3) a pile of economic news coming out, none of it good and (4) the market was steadily down all day Friday and finally (5) a monline downgrade on top of all that would have triggered a crash this week.
What do they do? The call goes something like this: "Hey, S&P, look there is going to be criminal charges and you are going down, but if you do this for us and take one for the team we'll keep that in mind when the trials start. All we need you to do is write a bogus rating. You've been doing it for years, what's one more? Yeah, Ambac. It's gotta stay AAA. Hey we get to crush all those damned unpatriotic shorts at the same time..."
So for all of you that argue that all the bad news has now been priced in, I would argue the contrary - now that Ambac has its AAA rating, which is the only thing anyone was really worrying about, all the GOOD news is priced in. Now, this week we get the bank write downs and bad econominc news, and the Working Group succeeded in avoiding the crash and we get instead a nice gentle down slope.
Just a thought...
FFDIC,
Any comment on this? TickerForum Error - Unauthorized Request
It looks like 91 vacancies are opening up, a total of about 223 current employees. So that would be a 40% increase in employment just for resolution and receivership department.
Are they just going to hire the 25 employees and leave the rest vacant?! What is going on here.
homedad 43, couldn't the death of film photography have something to do with Au/Ag price ratios?
CR or Tanta:
If the courts are refusing many foreclosures because they can't find the holder of the note, then would it not follow that buying a home today could be a huge risk? What if the seller can't prove he really satisfied the right note holder when he passed the house to a new buyer? Something is fishy here. See article:
Banks Lose to Deadbeat Homeowners as Loans Sold in Bonds Vanish - Bloomberg.com
from efinancialnews.com:
Credit Suisse chief calls the end of the sub-prime crisis
Bob Parker, vice-chairman of Credit Suisse Asset Management, has told his firm's clients the worst of the sub-prime mortgage crisis, described as one of the worst financial disasters of the last half a century, will be over within weeks.
Whew, that's really good news. OTOH, now we move on to the Alt A crisis, the Option Arm crisis, the credit card crisis, the variable rate whatever crisis. Oh, and the little matter of foreclosures and jingle mail. Good thing subprime at least is over.
"Creature from Jekyll Island"
worst. book. ever.
Thank you.
Too late to this thread, but oh well...
Re: Credit unions
U.S. Central Federal Credit Union, the non-profit company that invests on behalf of 8,400 local lenders, lost its AAA rating from Standard & Poor's after reporting a $760 million drop in the value of subprime-infected securities.
Subprime Markdowns Reach U.S. Central, Credit Unions (Update2) - Bloomberg.com
Re: Etrade/Fidelity/Brokerage failures
Brokerage accounts are covered by SIPC insurance (for what that's worth). There are exceptions if you've got a margin account and your shares have been borrowed for shorting.
http://pinnaclevaluefund.com/reports/StockStrat(26).indd.pdf
IMHO, if it keeps you up at night move the funds to a large brokerage taht should weather the storm. If they start to go down, there really isn't any place to hide.
Beyond that, you could see if your brokerage offers direct registration (PITA):
Think carefully about how you want to own your stocks - USATODAY.com
Then, all you need to worry about is them being stolen.
Re: FDIC coverage
Curious what people think will happen to money market funds in an environment of bank failures?
There is no way that banks balance sheets could absorb a run on money market funds today:
http://www.gtnews.com/article/6564/chart.gif
ot too late Kicker. thx. And thx to Cuperson as well.
dfb writes:
Any suggestions on how to determine the health of a specific bank, credit union, or S&L?
The FFIEC makes available the Uniform Bank Performance Report for each bank on a quarterly basis. These reports are used by examiners at the very beginning of the examination process to identify trends and specific areas of the bank that require scrutiny. You will find a variety of information available, including ratio analysis and comparisons to peer groups. You can select various time periods to display.
This is an excellent resource if one is interested in just checking on one's local bank or researching other institutions for weaknesses or strengths.
Use this link to access UBPRs:
Search for an Institution
Xregul8r,
I was looking at a report for my Credit Union--Star One in CA (ncua.gov). Near the bottom it said, "Well Capitalized". Hard to tell, though, if they have assets in risky stuff. To the untrained eye, it looks like number salad. I'm just hoping it's safe.
Mike--
I've been out of the CU business for many years, and it has really changed. If you search around on NCUA.gov, you will probably find some definitions of what "well capitalized" and other classifications mean--it is probably X% or greater capital to total assets, or something like that. Then you have to determine what counts as capital.
> Hard to tell, though, if they have assets in risky stuff.
Aye, there's the rub. The perennial problem in analyzing any financial institution's balance sheet. There is never any way to know for sure what horrors lie within the loan portfolio. It is easy even for the "professionals" to get burned, even after having had the opportunity to do due diligence. Examiners only look at a fraction of loans--there's no way they can uncover all the problems. They place ever more reliance on internal/external audit and sound risk management practices.
Xregul8r,
I searched NCUA.gov and here is what I found:
Star One net worth: 11.93%.
Under current law an insured credit union is:
well capitalized if it has a net worth ratio of not less than 7%. Falling below 7% triggers an earnings retention requirement and involvement with NCUA that most insured credit unions would like to avoid;
adequately capitalized if it has a net worth ratio of not less than 6%. Falling below 6% requires the credit union to produce a net worth
restoration plan and additional regulatory involvement;
undercapitalized if net worth is below 6%. With this status comes
restrictions on asset growth and member business loans;
significantly undercapitalized if net worth is less than 4%;
critically undercapitalized if the net worth ratio is less than 2%. Here the NCUA Board has 90-days to take action, such as conserving, liquidating or merging the credit union.
CalculatedRisk writes:
MiTurn, the FDIC didn't release an emerging risk report at the end of 2007.
the fdic ceased publishing this document and i know that they are glad of it. they have been cheerleaders as the bubble grew. they still are in denial about the impending storm. give me a break about their solution -- hire back 25 retired liquidators on a temporary basis. they do not have the skill sets or the number of examiners needed to perform their core mission. despite this issue and the major morale problems at the agnecy, bair continues to rant at servicers to provide forbearance to every deadbeat homedebtor.
Mike--
I've pretty much forgotten how CU balance sheets are structured--back when I was involved there were "membership shares" and of course retained earnings or the CU equivalent thereof. CU assets were just car and personal loans--only a few of the biggest were tiptoeing into the mortgage market. This was in the mid-1980s.
Back then, CUs could fail by making a lot of crappy personal or car loans, or if their main sponsor closed up shop and laid off the field of membership. Now, with the relaxation of the common bond requirement and the proliferation of "community" charters, not to mention offering as wide an array of products as banks, I would think CUs have as much opportunity to blow up as any bank.
Just make sure you don't exceed the NCUA insurance limits and you will be OK.
I'm very much against what the CU business has evolved into. They want to do everything a bank does but be tax-exempt. Swell. A lot of CUs are going to regret diversifying into so many new lines of business.
Of course, a lot of banks are going to regret being in the banking business, so fair's fair.
Thx Xregul8r. This is very helpful. I think I'll drag some financier and auditor friends into digging into how to better determine CU health or find someone who might be more versed in the CU industry. From a first glance at Star One, it looks in better shape, but it has a larger percentage of its deposits and worth tied up in mortgages and other loans than my CU does.
My CU has a net worth ratio of: 8.39% It has fluctuated between 7.11 and 9% over the past four years.
My CU has additional share/deposit insurance with American Share Insurance. Can that even be trusted?
What puts shivers up and down my spine is that I'm in California where there are likely a lot of bad loans. There are a lot of banks and CUs that made poor loan decisions and the question is which pile will stink the worst at the end of the day.
And what's a reasonable premium above the day's stated .oz rate?
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