Two More Banks Bite the Dust

[Razor]

Things were worse in the past, like the infamous S&L crisis of the 80's...........this current problem pales by comparison. I for one would like to see the FREE MARKET fix things, NOT the govt.

The media does a great job of massaging data to make things look horrible. 400,000 folks are facing foreclosure, but I think there are tens of millions of mortgages in the USA........... Bottom line, the govt is MUCH more worried about the banks and mortgage companies failing than Dick and Jane Smith losing their home.............

"In an effort to take advantage of the real estate boom (outstanding US mortgage loans: 1976 $700 billion; 1980 $1.2 trillion)[citation needed]and high interest rates of the late 1970s and early 1980s, many S&Ls lent far more money than was prudent, and to risky ventures which many S&Ls were not qualified to assess. L. William Seidman, former chairman of both the FDIC and the Resolution Trust Corporation, stated, "The banking problems of the '80s and '90s came primarily, but not exclusively, from unsound real estate lending."

In my opinion it is too early to tell if this will be worse than The Savings and Loan Crisis. There are a lot of similarities and the foreclosures are just beginning. The big difference is low interest rates. Just have to wait and see how it plays out. The media might just be right about this one.
I agree that the market should fix itself and the government should stay out of it.

 

[Razor]

FDIC: Failed Bank Information - Bank Closing Information for First Priority Bank, Bradenton, FL

 

[OAG]

Yes, one more "bites the dust" AND 4 more go on the "shape up, or you may be next" list. Alan Gildersleeves mentioned this past week he did not think the housing situation was "at a bottom yet either". Funny how his policies that caused the "free flow on mortgages" and all other kinds of financial speculation "is not the cause" it is those "evil" banks.

 

[cute fuzzy bunny]

I still like the part where he coached people to skip fixed mortgages in favor of the adjustable rate mortgages...while knowing with some certainty that rates would be going up in the near future.

Worst. Advice. Ever.

Alan Greenspan: ARMed and dangerous. - By Daniel Gross - Slate Magazine

 

[barbarus]

I'm happily ignorant.

Stupidity will be my shield.

And I take a solemn oath to never read a single bank balance sheet too.

 

[2B]

I'm happily ignorant.

Stupidity will be my shield.

"It is best for a man to be middle-wise." -- Elder Edda

Now these people knew about shields.

 

[OAG]

Number 9 this year: http://www.bloomberg.com/apps/news?pid=20601087&sid=a9iX_1ShWWAs&refer=home

 

[OAG]

This story is beginning to become a routine Friday event; bank #10 fails. However, this time even those with over $100K are protected.

"All depositors of Integrity Bank, including those with deposits in excess of the FDIC's $100,000 insurance limit, will automatically become depositors of Regions Bank for the full amount of their deposits, the FDIC said in a statement."

 

[Alan]

If you are concerned about particular banks, you can use Bankrate.com to look up a measure of how financial safe they are according to their CAEL rating.

http://www.bankrate.com/brm/safesound/rating.asp

CAEL stands for Capitalization, Asset quality, Earnings and Liquidity. These are the measures of an institution's safety and soundness used in this model. It is an abbrieviated version of the industry standard ratings known as CAMEL. Incorporated into these measures are more than 20 tests applied on a quarterly basis to the results reported by each institution. Using this data from the Federal Deposit Insurance Corporation and Office of Thrift Supervision, the program assigns a value to each of the CAEL categories and calculates a composite rating for the institution. More than 10,000 FDIC-Insured banks and thrifts are analyzed.
The most desirable Safe & Sound CAEL rating is one, the least desirable is five, in accordance with industry standards. Bankrate.com has reversed this order in its graphic rankings for easy visual recognition. The top star rating is five, the lowest star rating is one. Performing institutions will generally receive a rating of 3 or better stars with the majority of banks falling into the 3-4 star range. By contrast, the performing Safe & Sound CAEL range would be 1, 2 and 3 with the majority of institutions falling into the 2 range. No report is available for institutions that do not have four quarters of historical financial data on file with the federal regulatory agencies. This may indicate an institution is too new to rate and is not necessarily any indication of financial strength or weakness.
This information is believed to be reliable but the information is not guaranteed. In addition, events since the information was collected may have altered an institution’s financial condition.

 

[OAG]

This is nice to know information, but as long as the institution's deposits are FDIC insured, it is not that important. Anyone know what the CAEL ratings were for the 10 failed banks this year were?

 

[OAG]

Under the "dump a Bank-a-week" program another one goes yesterday. This one in Nevada - this is #11 for the year.

 

[2B]

Under the "dump a Bank-a-week" program another one goes yesterday. This one in Nevada - this is #11 for the year.

I had a $50K CD with these guys (Silver State Bank). According to the announcement the deposits will be transferred to Nevada State Bank. I guess I'll find out next week whether they honor the CD interest rate or if they'll cash me out. It could go either way.

 

[OAG]

It would be good if you post what happens. I suspect every closing may be different but it would be nice to know. Last weeks bank closing (Integrity Bank) actually honored deposits ABOVE the $100K limit (according to the announcement).

 

[Tadpole]

Some large bank data

http://www.investorsinsight.com/***-file.ashx/__key/CommunityServer.Blogs.Components.WeblogFiles/thoughts_5F00_from_5F00_the_5F00_frontline/jm090508image001_5F00_3.jpg
So, how did the investors who gave the various banks capital do on their investment. Shilling shows us 9 deals done by sovereign wealth funds. The best return was down a mere 26.6%. The worst was Singapore in UBS for down 56% in less than nine months.

http://www.investorsinsight.com/***-file.ashx/__key/CommunityServer.Blogs.Components.WeblogFiles/thoughts_5F00_from_5F00_the_5F00_frontline/jm090508image002_5F00_3.jpg
The old line is "Fool me once, shame on you! Fool me twice, shame on me!" How difficult do you think it is for any major bank to go back to sovereign wealth funds and ask for more? If they got it, you can bet the terms will not be favorable to current shareholders.

From Mauldin's latest Frontline:
Thoughts from the Frontline

 

[Brat]

I am really crossing my fingers, hoping that WaMu survives...

 

[2B]

I am really crossing my fingers, hoping that WaMu survives...

When I was up in Bainbridge visiting my sister, she told me that the father of one of her daughter's friends is a high up person at WaMu. She said that he thinks their survival is very iffy. They are on the edge.

 

[Brat]

WaMu head to roll...

WaMu to Oust Killinger, Name Meridian's Fishman CEO, WSJ Says

By Ari Levy and Joseph Galante
Sept. 7 (Bloomberg) -- Washington Mutual Inc. plans to oust Kerry Killinger as chief executive officer after 18 years and replace him with Alan Fishman of Meridian Capital Group, the Wall Street Journal reported, citing people familiar with the matter.
Fishman was chief operating officer at Philadelphia-based Sovereign Bank before becoming chairman of Meridian, a New York- based commercial mortgage broker, the Journal said. Sovereign Bancorp is the second-biggest U.S. savings and loan after Seattle-based Washington Mutual, know as WaMu.
An announcement is expected tomorrow before financial markets open, the newspaper said. Washington Mutual spokesmen Brad Russell and Derek Aney didn't return calls for comment.
Killinger, 59, had already stepped down as chairman in June after investors voted to remove him. The stock has tumbled 88 percent in 12 months. Losses tied to home loans have claimed the jobs of CEOs including Citigroup Inc.'s Charles O. ``Chuck'' Prince, Wachovia Corp.'s Kennedy Thompson and Merrill Lynch & Co.'s Stan O'Neal. Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron were replaced today after the U.S. seized control of the two mortgage companies.
David Dreman, ranked among WaMu's 10 biggest shareholders, called for Killinger's ouster in June, saying the CEO must be held accountable for $3 billion in subprime-related losses. The following month, WaMu reported a $3.3 billion second-quarter loss as more borrowers fell behind on mortgage payments and said mortgage losses in the 2-1/2 years may be as much as $19 billion.
Analysts began speculating that WaMu would need to raise more capital on top of the $7 billion collected in April from a group led by David Bonderman's TPG Inc.
TPG spokesman Owen Blicksilver declined to comment today.

 

[OAG]

Yep, CEO gone this morning. Watch out this coming Friday.

 

[2B]

Yep, CEO gone this morning. Watch out this coming Friday.

Why do I think this is prophetic?

Did he leave with a really good golden parachute?

Note on my CD with the last failed bank. As of day 1 there isn't anything changed in my ETrade account listing. A dividend is due on Sept 11 so I assume anything that will happen will happen then, if at all. It is a short term CD that I bought in the last couple of months and the interest rate is still normal for current short term CDs. I think they'll keep me.