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Bank Failures & FDIC Solvency

Old 02-07-2009, 12:03 PM
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Default Bank Failures & FDIC Solvency

February 2, 2009 - The closing of Magnet Bank, Ocala National Bank and Suburban Federal Savings Bank on Friday brought the total number of bank and thrift failures for 2009 to six. There were 25 failures during 2008.



And 5-days later:

February 7, 2009 - Regulators announced Friday that three more U.S. banks have failed, bringing the total for 2009 to nine. ... FirstBank Financial Services, Alliance Bank and County Bank.


That is 9 bank failures in the first 38-days of 2009 -- more an 1/3 of all bank failures for the entire YEAR of 2008. And we're just getting started, already being warned Q2 of 2009 is going to be a lot worse than Q1...and Q1 is just getting started.



Regarding FDIC solvency -- Federal Deposit Insurance Corp. spokesman David Barr said the agency's estimated cumulative losses to its deposit insurance fund from bank and thrift failures during 2008 was $15.6 billion ... While a year-end figure was not yet available, the FDIC's deposit insurance fund totaled $34.6 billion as of Sept. 30.

$34.6 billion - $15.6 billion = $19 billion ... less whatever those 9 bank failures of 2009 ate out of the FDIC reserves. If bank failures go the way we are being told they are going to go, it doesn't look like the FDIC is going to be able to cover the losses. That means FDIC will borrow from the Dept of Treasury -- and where does the Treasury get its money? -- it borrows from the Federal Reserve Bank. And where does the Fed get its money? -- from the banks that are failing.

This could get interesting, has potential for a crap load of entertainment value.



ETA: Oops! My numbers above are wrong! The FDIC's reserve of $34.6 billion is AFTER, NOT BEFORE the $15.6 billion losses of 2008. That said, this whole thing still has a lot of potential for some great entertainment in the coming months.

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Old 02-07-2009, 02:34 PM
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Default Re: Bank Failures & FDIC Solvency

Legislation that would more than double deposit insurance coverage and offer safeguards for banks is being considered by Congress. The House Financial Services Committee unanimously approved a measure that would raise coverage to $250,000 per depositor per bank, from $100,000.

Congress also may extend the FDIC’s line of credit with the Treasury to $100 billion from $30 billion to replenish the deposit fund. The FDIC said bank failures through 2013 may cost the fund more than the $40 billion estimated in October. ...

The FDIC on Dec. 16 doubled premiums it charges banks to replenish its reserves, which totaled $34.6 billion as of the third quarter. The Washington-based agency oversees 8,384 institutions with $13.6 trillion in assets. ...

The FDIC classified 171 banks as “problem” in the third quarter, a 46 percent jump from the second quarter, and said industry earnings fell 94 percent to $1.73 billion from the previous year. ...


http://www.bloomberg.com/apps/news?p...wmM&refer=news





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Old 02-07-2009, 03:19 PM
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Default Re: Bank Failures & FDIC Solvency

Yup! Lots of potential for entertainment.


[i]WASHINGTON -- Treasury Secretary Timothy Geithner warned ... on Saturday that the U.S. financial system remains "badly damaged," but that the ... administration planned to act both quickly and aggressively to deal with the crisis, according to one lawmaker present.

"He did say that some institutions are so frail that they would not survive," said House Rep. Brad Miller ... a member of the House Financial Services Committee.

The speech made it clear, Mr. Miller said, that the financial system remains fragile.

"I don't think we know yet how bad the industry's insolvency problem is," Mr. Miller said. "If we had regulators go in and examine the books like we did at Fannie Mae and Freddie Mac a great number of our systemically important financial institutions could be insolvent."

http://online.wsj.com/article/SB1234...googlenews_wsj

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Old 02-07-2009, 04:33 PM
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The topic makes no sense and really doesn't matter; since the first bank bailout was what set the precedence.

The Federal Gov. will spend as much of everybodys tax money as they deem required to keep the banking system liquid regardless of any previous policy or guidelines and regardless of what it costs the taxpayer in the long run.

If you don't see this clearly, allow me to explain further: The mismanaged banks, those that could not regulate themselves, are grabbing your tax money by using the government as their agent to do so.

The resyt is just fog...like the FDIC and Treasury and Congress (and what they may of may not do) the above is simply what is happening. And what's worse, we the voters have watched and begged our government to pledge 1.5 TRILLION!!! dollars to mismanaged corporations and worthless people. BUT!, you and I have not been able to cast a vote on this huge amount spending and the pledging of your tax dollars.

If you think your taxes were bad a couple of years ago...you have not seen anything YET! And if you think this recession is bad wait and see what the inflation rate is in three years. If you think fuel has been high, and you have bad roads and bridges, and your kids schools sux, and a quart of milk or a pound of Uranium is expensive...you havent seen anything yet. Also, your costs for building out carbon reduced fuels are going to be HUGE in a very few years. Get ready for that really big cost that will be passed to everyone in the US!

Have you ever heard the term downsizing an economy?? You will very soon!

Headed straight for pure Socialism, I think.
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Old 02-07-2009, 04:52 PM
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Default Re: Bank Failures & FDIC Solvency

Where's that animated GIF of beating the dead horse when you need it?
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Old 02-07-2009, 04:54 PM
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Sorry but I must completely agree with Dog Tired. Well said!
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Old 02-07-2009, 06:52 PM
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Default Re: Bank Failures & FDIC Solvency

Damn, I bought BAC (Bank Of America) stock last week, way ahead on price right now, not sure when to sell though.

Maybe I’ll get lucky. Or get smart.



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Old 02-07-2009, 07:19 PM
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Don't get greedy ray
Remember pigs get fat, hogs get slaughtered.
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Old 02-07-2009, 08:43 PM
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Default RE: Bank Failures & FDIC Solvency

As long as we have paper and ink, we'll have money. So far, it seems like most troubled banks have been taken over without huge losses to the FDIC. Maybe that is because the TARP funds are being used by stronger banks to take over weaker banks upon request.
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Old 02-07-2009, 11:37 PM
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Default Re: Bank Failures & FDIC Solvency

Headed straight for pure Socialism, I think.
And maybe this will not be such a bad thing. We have seen what happens when we try the "hands off free market" thing. The pigs want more millions, and do not care how they make them.

And to make it even worse, they know that the government will not just allow banks to fail. So they get to gamble it all, WE get to assume all the risk, and THEY get all the gains. For a number of years, their bets paid off.

Well, they crapped out. And the house came to US for the chips.

To hell with that. I want to see executive compensation capped until ALL THE MONEY is paid back. All of it. Every single penny. Once it is all paid back - with interest - then I do not care what executive compensation is anymore.

The way I see it - banks have taken public money. Therefore, the executives are public employees. The public has every right to limit their pay. If they do not like it - they can find another job. I am sure there is a hot job market for executives who failed at their job and caused banks to fold.

Once the banks pay us back, they can "go private" again and then executive pay is not our business anymore. But banks WILL have to be regulated. Clearly, leaving the regulation to them is a bad idea. They can not handle it.
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Old 02-09-2009, 10:29 AM
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Default Re: Bank Failures & FDIC Solvency

Lazy wote:

" we try the "hands off free market" thing."

Who put in NAFTA? Answer: the same feds that are pledging yout future taxes to baill out thr banks.

"Once the banks pay us back" Naw man!! The bank ain't paying you Sh$%!! They already have their money and if you can go get it.... short of robbery, you are doing good!

If you think they will ever pay you back then you must be dreaming!!!

Banks don't regulate themselves.
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Old 02-09-2009, 01:28 PM
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What does NAFTA have to do with American banks? Big business WANTED NAFTA. They knew full well what it meant.

And if the banks never pay back the TARP funds - fine. Cap executive compensation forever. If a company takes bailout money, then until that money is paid back executive compensation (including stock options, golden parachutes, and whatever) is capped.

I can guarantee you that if executives can not get their $20 million end of year bonuses once this mess is over with, they will find the money to pay back the money. And if not, top pay for a bank executive will be limited. I can live with that.

I do not get a raise when I screw up. I get fired when I screw up. And I do not get fired by being handed this golden package worth millions. I get Joe The Security Guard who makes sure I do not even take a pencil from my desk. Why should an executive position be any different?
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Old 02-09-2009, 01:37 PM
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Default Re: Bank Failures & FDIC Solvency

Lazy_Iguana - 2/10/2009 5:28 AM

What does NAFTA have to do with American banks?
Prob not what you were thinking of, but what comes to mind is the provision in NAFTA that makes all fiscal transactions in NAFTA member countries transparent to all other NAFTA member countries. That means every one of your personal bank transactions are visible and available to Mexico and Canada, without your knowledge or consent being required.

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