If I may. One small nit about costs FDIC $214 million.
FDIC is an insurance collective with a government backstop. It isn't a cost to anyone until we get a few really big failures. Yeah sure, like that isn't gonna happen.
I recall during the late '80s bank failure announcements always happened on Friday evening. I think it gives the FDIC and the receiving institution the weekend to arrange the details. And by Monday, it's back to business as usual.
Keep up appearances at all costs, especially during an election year!
I wonder if the FDIC & the OTS have the capacity to dissolve IMB and CFC. If BAC doesn't get some special reward for assuming CFC I'll bet they fold immediately. THAT will be newsworthy.
Ahhh, stimulus check spent. Butchered out 76 pounds of ribeye costing 418 bucks gross. About a pound of waste, and 73 steaks without all that extra juice the supermarket adds. Nice fresh USDA Choice. I and my extended family be eatin' steak till xmas!!!
Butcher said prices went up a buck a pound retail last week, and corporate (Sam's Club) said get ready for more, also he was told to keep inventory lean. Said the restaurants are moving down to pork products in a lot of cases.
People should start doing mass purchases instead of piece rates on the big items.
Who was dumb enough to have more than the 100k limits in a podunk bank? Geez. Skinning the widders and orphans.
Rep. Kevin McCarthy (R-Bakersfield), whose district has been hard hit by foreclosures but who opposed the bill, said his constituent mail was running "50 to 1: 'Don't bail these people out.' "
From CR:
Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
$1.8B in deposits and $1.6B in separate(?) brokered deposits. Haven't we been here before when the S&L's offered greater than market rates to attract pieces of large liquidity pools set at the maximum FDIC insured level? These brokered deposits were used to fund the real estate speculation that gave us Charles Keating and the S&L crisis (how WILL McCain dance around the Keating Five scandal?).
Let's hope banks and regulators have been more cautious this time.
Periwinkle writes:
Where is FFDIC? Are you out there?
Periwinkle | 05.09.08 - 6:53 pm | #
I wonder if he's been called up... does the FDIC have a 'Ready Reserve'... if so he might be heading up Arkansas way now - kinda like a Tom Clancy movie!
OT: Not sure if this article on Buffett and Munger has already been linked here, but if not it's a good read. My favorite quote: "Capitalism without failure is like Christianity without hell," Buffett said.
The real rush for bank failures will be IMO August when all the pre-crunch retail deposit CDs are finally aged out and the banks try to offer below inflation rates and people pull the deposits.
Crisis? Don't Panic! It is all too tempting when you first find out a loved one is in a religious cult to take drastic action. Unfortunately drastic action can often backfire, and make the situation much worse...
The bank's ROE went from 27.68% in 2006 to -56.63% in 2007 and its non performing loans from 2.5% assets to 21% assets. Equity ended up around a bit over 3% of assets. Yet deposits increased during that time. I'd say if you are involved in a bank, you'd better check Bankrate for safe and sound banks. This one had the lowest possible rating and is now defunct. I'd be very leery of any bank with a 5 rating from Bankrate.
Announcing the receivership after close of business on Friday gives the acquiring bank the chance to prep for the Monday morning rush. The bank that is taking over has to get their employees some information so that when depositors from the failed bank come in on Monday they don't get the glazed-eye look from tellers; and they have to get their info systems prepped as well. This can't be done before the announcement because obviously word would leak out.
Seems like Friday evenings in the banking sector ought to be interesting for the next year or two. Perhaps there's money to be made by staking out FDIC HQ and following gov't cars to the airport:)
Regulators are bracing for well over 100 bank failures in the next 12 to 24 months
We will see how that works out... extrapolating from 4.1 months, the number looks more like 10. I don't want to see a large number fail, that would just rattle the sheeple.
One of the reasons interest rates are so low now, is to allow the banks to re-capitalize (i.e. to recover from those stupid-loan loses).
BTW - just to give some perspective of what a 'real recession' looks & feels like... from the Time link I posted above:
Companies are going into bankruptcy court and asking for protection from their creditors at the rate of about 500 every week. By the end of September, 18,572 companies had already filed for bankruptcy, more than in all of 1981. Wall Street's Dun & Bradstreet predicts that the number of corporate and commercial failures will approach 24,000 by the end of the year.
I graduated from college in 1981 - almost everyone I knew either didn't have a real job after they graduated OR promptly lost the real job they had. And my buddies were mostly engineers... the liberal arts majors didn't even look for work!
Oh well - job applicant drug testing was both unreliable and infrequent & there was a lot of good cheap pot about... so we didn't know we were poor.
Are there laws in some/any jurisdictions which make uninsured depositors senior to other creditors in the bankruptcy proceedings?
Massachusetts has a state deposit insurance fund that covers deposits over $100K, but you need to read up on the details.
Indiana has excess deposit insurance for state and municipal funds only.
Under current federal law, the FDIC's claim is senior to all other creditors, including excess depositors (the law changed since the last wave of bank closings in the 80's and early 90's). Since the FDIC's claim equals the amount of the insured deposits, the chances of an excess depositor making any recover are very slight.
By the way, the federal laws governing bank receiverships are separate from bankruptcy laws.
I'm thinking FFDIC's inclusion in a lawsuit against the FDIC makes his return unlikely, at least until the suit is over,...or a change in administrations.
"who cares about some hole in the wall bank in arkansas? this isn't good enough for your site CR."
Gotta feeling something like that was said about the first Texas S&L to go under in the '80s.
Rob Dawg, are you talking about amounts greater than the FDIC insurance or about full fledge bank runs? If the latter, why would cd holders wait until maturation if they felt their capital was at risk? I have a hard time seeing a Norther Rock type bank run due to the $100k per account insurance provided by the FDIC. Having said that, all bets are off if the fed gov suggested even the slightest bit deposits less than $100k were at risk.
I've been out working in the yard and just came in to check CR. The FDIC continues to hire experienced retirees. One of my good friends is returning this month and expects to be on the road often at age 60. That's not much of a lifestyle but the money is great and he is ready to return. These are the retirees the FDIC paid buyouts to leave in May 2005. In mid 1980s Texas we closed banks on Thursdays but later it shifted to mostly Fridays giving us less time over the weekend to complete the closing process which required more FDIC staffing.
Wow. What thoroughly irresponsible people. I'm sure the older kids just love being parents tot heir younger siblings instead of enjoying their years as teenagers.
Nice! 18 Kids is awesome. You could start a political dynasty with that family. Imagine having 18 people from the same family in congress? What if they all lived in separate states and ran for Senate positions?
I've watched some of those Discovery channel shows about the Duggars (motto: Lady, Your Vagina Is Not A Clown Car) - they buy almost all their kids' clothes in the local Goodwill, each child gets one new Goodwill pair of shoes a year. Now, I do thrift stores too, but my kids get new shoes, and more than one pair a year!
Miller said Frank helped win his support by adding a provision that would permanently raise the maximum mortgage the Federal Housing Administration can back to $729,750 from $362,790.
The higher limit, a priority of Gov. Arnold Schwarzenegger's that is supported by virtually the state's entire 53-member House delegation, would increase the availability of FHA-backed financing in states such as California.
"People around the country are suffering, nowhere more so than in high-cost areas like California," Miller said.
I believe Tanta and others among you predicted that the "temporary" increase in loan limits would likely be made permanent. Seems like a good prediction.
This guy is a piece of work. From the latimes article:
GOP lawmaker breaks ranks - Los Angeles Times Florida Rep. Ginny Brown-Waite, another GOP supporter, said, "I believe in the market working itself out, but that just doesn't seem to be happening."
Listen up, you blithering moron: The market is working itself out. If you believed in the market, you'd be pushing legislation to streamline the foreclosure process and expedite sales of REO's, not bailing out the speculators. The only problem preventing a more rapid resolution is that everyone expects a bailout, and YOU are the F-ING PROBLEM!
I'm reading "Under the Banner Of Heaven" about the polygamist mormon fundamentalists . . . what a freakin' racket. Marry one woman, have a "spiritual marriage" with the rest of your wives, pump out kids like an egg farm and collect welfare out the wazoo.
Some of these guys have 50 kids. A bunch of wannabe Genghis Khan's, with a lot of white supremacy and incest mixed in.
Off topic. But I'm sure Tanta will pick up on this today sometime. The NYTimes on walking away: "Investors are going to default right away because they have negative equity, said Robert Van Order, an adjunct professor of finance at the University of Michigan. But thats different from people who moved into the house.
I sense the hypothesis is correct. Now, where's the data?
Investors and speculators never intended to live in the house or only did so for a short time while they made improvements.
First, booyaaa!
I love the smell of a failure in the afternoon...
This is in Walmart-ville, how can they fail with all the junk going to China...
sneaking the failure out with the rest of the Friday trash? How fast can people get to their banks across the US to make withdrawls?
Crispy i think the only thing going to China these days are hatemail about Tibet and T-Bills that aren't quite worth what they use to be....
Looks like a bubble in bank buildings is about to break
Is there an Over-Under # for banks being taken over by FDIC for 08 that we can bet on?
Even without knowing the number, I'll take the over.
If I may. One small nit about costs FDIC $214 million.
FDIC is an insurance collective with a government backstop. It isn't a cost to anyone until we get a few really big failures. Yeah sure, like that isn't gonna happen.
I'll guess two per state or 100 !
I recall during the late '80s bank failure announcements always happened on Friday evening. I think it gives the FDIC and the receiving institution the weekend to arrange the details. And by Monday, it's back to business as usual.
Keep up appearances at all costs, especially during an election year!
I wonder if the FDIC & the OTS have the capacity to dissolve IMB and CFC. If BAC doesn't get some special reward for assuming CFC I'll bet they fold immediately. THAT will be newsworthy.
Save the bondholders and counterparties of Bear Stearns, screw the creditors and excess depositors of regional banks.
Uh, the banks pay fees to the FDIC,
out of bank profits, which come from
depositors, or..."we" in the royal or
polite sense.
How much does the FDIC have it its pot?
Why am I thinking "Let's take the whole day off" (Elfman) is the proper theme song for FDIC Fridays?
Where is FFDIC? Are you out there?
The lyrics include something about his garden whispering to him to take the whole day off.
FFFDIC!
Ahhh, stimulus check spent. Butchered out 76 pounds of ribeye costing 418 bucks gross. About a pound of waste, and 73 steaks without all that extra juice the supermarket adds. Nice fresh USDA Choice. I and my extended family be eatin' steak till xmas!!!
Butcher said prices went up a buck a pound retail last week, and corporate (Sam's Club) said get ready for more, also he was told to keep inventory lean. Said the restaurants are moving down to pork products in a lot of cases.
People should start doing mass purchases instead of piece rates on the big items.
Who was dumb enough to have more than the 100k limits in a podunk bank? Geez. Skinning the widders and orphans.
Someday this war's gonna end...
Rep. Kevin McCarthy (R-Bakersfield), whose district has been hard hit by foreclosures but who opposed the bill, said his constituent mail was running "50 to 1: 'Don't bail these people out.' "
GOP lawmaker breaks ranks - Los Angeles Times
Did someone say "bank failure" this morning?
Somebody forgot to fog the mirror when they applied for a loan apparently. It's like a modern day Brothers Grimm fairy tale.
O Lady Queen, though failure ye be, ANB is failure far to see.
From the FDIC annual report:
FDIC: Annual Reports
As of 2007:
Insurance Fund Balance \t$52,413,000,000
Fund as a Percentage of Insured Deposits (reserve ratio) \t1.22%
who cares about some hole in the wall bank in arkansas? this isn't good enough for your site CR.
The over-under?
From CR:
Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.
The under is a suckers bet.
$1.8B in deposits and $1.6B in separate(?) brokered deposits. Haven't we been here before when the S&L's offered greater than market rates to attract pieces of large liquidity pools set at the maximum FDIC insured level? These brokered deposits were used to fund the real estate speculation that gave us Charles Keating and the S&L crisis (how WILL McCain dance around the Keating Five scandal?).
Let's hope banks and regulators have been more cautious this time.
Yeah, Right!
Jim
Question for knowledgeable individual:
Are there laws in some/any jurisdictions which make uninsured depositors senior to other creditors in the bankruptcy proceedings?
Periwinkle writes:
Where is FFDIC? Are you out there?
Periwinkle | 05.09.08 - 6:53 pm | #
I wonder if he's been called up... does the FDIC have a 'Ready Reserve'... if so he might be heading up Arkansas way now - kinda like a Tom Clancy movie!
OT: Not sure if this article on Buffett and Munger has already been linked here, but if not it's a good read. My favorite quote: "Capitalism without failure is like Christianity without hell," Buffett said.
Lenders deserve to suffer, Buffett says
The real rush for bank failures will be IMO August when all the pre-crunch retail deposit CDs are finally aged out and the banks try to offer below inflation rates and people pull the deposits.
FFDIC has been stoplossed?
Don't transferred CD accounts lose accrued interest back to account create date?
crispy&cole,
From your link.
This crisis calls for drastic action...
Crisis? Don't Panic!
It is all too tempting when you first find out a loved one is in a religious cult to take drastic action. Unfortunately drastic action can often backfire, and make the situation much worse...
Coincidence?
I have some worse news. It turns out Sheila C. Bair is Chairman of the Federal Deposit Insurance Corporation.
Buffet stole that one from Frank Borman, and for Borman it wasn't a 'hypothetical'...
"Capitalism without bankruptcy is like Christianity without hell."
Link
The bank's ROE went from 27.68% in 2006 to -56.63% in 2007 and its non performing loans from 2.5% assets to 21% assets. Equity ended up around a bit over 3% of assets. Yet deposits increased during that time. I'd say if you are involved in a bank, you'd better check Bankrate for safe and sound banks. This one had the lowest possible rating and is now defunct. I'd be very leery of any bank with a 5 rating from Bankrate.
Save the bondholders and counterparties of Bear Stearns, screw the creditors and excess depositors of regional banks.
Steve
Exactly. Those people don't "vote."*
Announcing the receivership after close of business on Friday gives the acquiring bank the chance to prep for the Monday morning rush. The bank that is taking over has to get their employees some information so that when depositors from the failed bank come in on Monday they don't get the glazed-eye look from tellers; and they have to get their info systems prepped as well. This can't be done before the announcement because obviously word would leak out.
Seems like Friday evenings in the banking sector ought to be interesting for the next year or two. Perhaps there's money to be made by staking out FDIC HQ and following gov't cars to the airport:)
Regulators are bracing for well over 100 bank failures in the next 12 to 24 months
We will see how that works out... extrapolating from 4.1 months, the number looks more like 10. I don't want to see a large number fail, that would just rattle the sheeple.
One of the reasons interest rates are so low now, is to allow the banks to re-capitalize (i.e. to recover from those stupid-loan loses).
BTW - just to give some perspective of what a 'real recession' looks & feels like... from the Time link I posted above:
Companies are going into bankruptcy court and asking for protection from their creditors at the rate of about 500 every week. By the end of September, 18,572 companies had already filed for bankruptcy, more than in all of 1981. Wall Street's Dun & Bradstreet predicts that the number of corporate and commercial failures will approach 24,000 by the end of the year.
I graduated from college in 1981 - almost everyone I knew either didn't have a real job after they graduated OR promptly lost the real job they had. And my buddies were mostly engineers... the liberal arts majors didn't even look for work!
Oh well - job applicant drug testing was both unreliable and infrequent & there was a lot of good cheap pot about... so we didn't know we were poor.
Carlo:
Are there laws in some/any jurisdictions which make uninsured depositors senior to other creditors in the bankruptcy proceedings?
Massachusetts has a state deposit insurance fund that covers deposits over $100K, but you need to read up on the details.
Indiana has excess deposit insurance for state and municipal funds only.
Under current federal law, the FDIC's claim is senior to all other creditors, including excess depositors (the law changed since the last wave of bank closings in the 80's and early 90's). Since the FDIC's claim equals the amount of the insured deposits, the chances of an excess depositor making any recover are very slight.
By the way, the federal laws governing bank receiverships are separate from bankruptcy laws.
HTH
I'm thinking FFDIC's inclusion in a lawsuit against the FDIC makes his return unlikely, at least until the suit is over,...or a change in administrations.
"who cares about some hole in the wall bank in arkansas? this isn't good enough for your site CR."
Gotta feeling something like that was said about the first Texas S&L to go under in the '80s.
Rob Dawg, are you talking about amounts greater than the FDIC insurance or about full fledge bank runs? If the latter, why would cd holders wait until maturation if they felt their capital was at risk? I have a hard time seeing a Norther Rock type bank run due to the $100k per account insurance provided by the FDIC. Having said that, all bets are off if the fed gov suggested even the slightest bit deposits less than $100k were at risk.
Best,
BTW- Nice to see you back here StagMark.
I've been out working in the yard and just came in to check CR. The FDIC continues to hire experienced retirees. One of my good friends is returning this month and expects to be on the road often at age 60. That's not much of a lifestyle but the money is great and he is ready to return. These are the retirees the FDIC paid buyouts to leave in May 2005. In mid 1980s Texas we closed banks on Thursdays but later it shifted to mostly Fridays giving us less time over the weekend to complete the closing process which required more FDIC staffing.
In other news from Arkansas...
Fuller house: Arkansas mom pregnant with 18th child
Michelle Duggar gives her kids a Mothers Day surprise: Were expecting!
And they are both real estate agents too so it isn't even 'off topic'!!!
An unbelievable read...
Wow. What thoroughly irresponsible people. I'm sure the older kids just love being parents tot heir younger siblings instead of enjoying their years as teenagers.
Richard anyone ever tell you you're a dick?
Nice! 18 Kids is awesome. You could start a political dynasty with that family. Imagine having 18 people from the same family in congress? What if they all lived in separate states and ran for Senate positions?
I've watched some of those Discovery channel shows about the Duggars (motto: Lady, Your Vagina Is Not A Clown Car) - they buy almost all their kids' clothes in the local Goodwill, each child gets one new Goodwill pair of shoes a year. Now, I do thrift stores too, but my kids get new shoes, and more than one pair a year!
A clip from Crispy's LA Times story linked above:
Miller said Frank helped win his support by adding a provision that would permanently raise the maximum mortgage the Federal Housing Administration can back to $729,750 from $362,790.
The higher limit, a priority of Gov. Arnold Schwarzenegger's that is supported by virtually the state's entire 53-member House delegation, would increase the availability of FHA-backed financing in states such as California.
"People around the country are suffering, nowhere more so than in high-cost areas like California," Miller said.
I believe Tanta and others among you predicted that the "temporary" increase in loan limits would likely be made permanent. Seems like a good prediction.
This guy is a piece of work. From the latimes article:
GOP lawmaker breaks ranks - Los Angeles Times
Florida Rep. Ginny Brown-Waite, another GOP supporter, said, "I believe in the market working itself out, but that just doesn't seem to be happening."
Listen up, you blithering moron: The market is working itself out. If you believed in the market, you'd be pushing legislation to streamline the foreclosure process and expedite sales of REO's, not bailing out the speculators. The only problem preventing a more rapid resolution is that everyone expects a bailout, and YOU are the F-ING PROBLEM!
Anonymous @ 7:55,
Anybody ever tell you that people who post insults anonymously are douchebags? Man up.
But 18X300=5400 in rebate check, WINNER!
More butter please.........
plus the parents, total $6600!
wow.
I'm reading "Under the Banner Of Heaven" about the polygamist mormon fundamentalists . . . what a freakin' racket. Marry one woman, have a "spiritual marriage" with the rest of your wives, pump out kids like an egg farm and collect welfare out the wazoo.
Some of these guys have 50 kids. A bunch of wannabe Genghis Khan's, with a lot of white supremacy and incest mixed in.
Lots of amateur trolls this evening.
I'm still looking for a funding source as a professional.
"FEED ME!" --- Little Shop of Horrors
Billy Hill:
Does it have to be human?
Does it have to be blood?
Where am I supposed to get it?
Harsh Reality wrote
As of 2007: (fdic has) an
Insurance Fund Balance of $52,413,000,000
Fund as a Percentage of Insured Deposits (reserve ratio) 1.22%
Harsh Realty | 05.09.08 - 7:00 pm | #
===
ok so heres my question
if fdic has 52 billion set aside to cover depositors in case of bank failures...
in which banks have they deposited that money ?????
Off topic. But I'm sure Tanta will pick up on this today sometime. The NYTimes on walking away: "Investors are going to default right away because they have negative equity, said Robert Van Order, an adjunct professor of finance at the University of Michigan. But thats different from people who moved into the house.
I sense the hypothesis is correct. Now, where's the data?
Investors and speculators never intended to live in the house or only did so for a short time while they made improvements.
link to nytimes article:
Mortgage Holders Find It Hard To Walk Away From Their Homes - NY Times
LOL, I have a CD issued by ANB in my IRA.