Two More Banks Bite the Dust

[OAG]

Something for those recalled retired FDIC workers to do:

http://www.cnn.com/2008/US/07/26/fdic.banks.ap/index.html

 

[brewer12345]

Hmmm, Nevada bank with lots of construction loans. I am shocked, shocked that they ran into trouble (not).

 

[Razor]

I have a feeling this is only the beginning. Most banks are in the same boat.

 

[brewer12345]

I have a feeling this is only the beginning. Most banks are in the same boat.

I'm curious: how many bank balance sheets have you looked at recently in forming that opinion?

 

[ziggy29]

Hmmm, Nevada bank with lots of construction loans. I am shocked, shocked that they ran into trouble (not).

Wonder if Arizona and Florida are next.

 

[Razor]

I'm curious: how many bank balance sheets have you looked at recently in forming that opinion?

None, but after observing two banks in my little town closing their doors I would wager there are more big bank busts to come. Most banks jumped on board the no holds barred lending frenzy so they are probably facing the same problems as the failed banks.
I am curious as to why you think just a few banks will have problems.
From what I have read anywhere from 2 to 5% of banks may fail.

 

[ziggy29]

I am curious as to why you think just a few banks will have problems.

I think as far as smaller local/regional banks go, it partially depends on location. If you live in a place where the housing bubble never inflated, there are far fewer toxic mortgages for a bank to swallow. There's a tendency to only notice what the media are telling you. All they'll talk about is money center banks and the regionals in states/metros where there is a popping bubble.

It's like imagining a news story where they say "And in other news, 94.5% of Americans are employed and no planes crashed today."

 

[brewer12345]

None...

Fascinating.

 

[crazy connie]

First National Bank of Arizona closes down


[SIZE=+1]More Phoenix Local News[/SIZE]

It wasn't on the national news page but it has hit here in Arizona.

 

[Razor]

Fascinating.

Did you know there are 7500 banks in this country. How many of those bank balance sheets have you looked at?

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080714/REG/436047405

More bank failures to come after IndyMac, say analysts
As many as 300 banks could fail over the next three years

July 14, 2008

(Reuters)—More U.S. banks may fail after the collapse of mortgage lender IndyMac Bancorp, straining a financial system seeking stability after years of lending excesses.

More than 300 banks could fail in the next three years, said RBC Capital Markets analyst Gerard Cassidy, who had in February estimated no more than 150.

Banks face pressure as credit losses once concentrated in subprime mortgages spread to other home loans and debt once-thought safe. This has also led to investor worries about the stability of mortgage finance companies Fannie Mae and Freddie Mac; IndyMac is not related to either

 

[brewer12345]

Did you know there are 7500 banks in this country. How many of those bank balance sheets have you looked at?

Apparently more than you have.

Will there be more banks in trouble? Sure. But nobody really knows how many. In any case, an informed opinion is a lot more useful than repeating what some dude trumpeted by the media has spouted.

 

[2B]

There are a steady stream of small, local bank failures in most years. Bad management exists everywhere and a small bank has less margin for error.

A parade of small bank failures in 2008 won't disrupt anything. The fear is that one of the big boys will bite the dust. A Bank of America or Citigroup would be devastating on the assets of the FDIC. A WaMu would hurt but no be too big of a problem if it went down. The biggest question on the "failure" is whether the assets are tempting enough for another bank to pick them up. If the FDIC has to start massive liquidations and operationing failed banks, the system will become less pleasant.

I'm with Brewer in not getting too excited about what's happened so far. The anti-bank hype is being screamed by the "shorts" and they make money off fear and panic. They make even more if they are right but that remains to be seen.

 

[Razor]

In any case, an informed opinion is a lot more useful than repeating what some dude trumpeted by the media has spouted.

Aren't many opinions from people more informed than you even more useful? Many folks that do read bank balance sheets have the same opinion that more banks will fail.

"Housing and credit problems are threatening to touch off a troubling new trend: an increase in bank failures. As the banking industry braces for higher loan losses, the Federal Deposit Insurance Corp.—which guarantees accounts at more than 8,500 banks and savings associations—has recently increased its tally of "problem" institutions by more than 50 percent, to 76, from the year-earlier period. Meanwhile, the agency is working to bring 25 officials—who served during a wave of bank failures in the savings and loan crisis of the 1980s—out of retirement.
The FDIC's moves come weeks after another bank regulator, Comptroller of the Currency John Dugan, predicted "an increase in bank failures" in the coming months. Federal Reserve Chairman Ben Bernanke expressed similar concerns in congressional testimony last week but noted that while certain smaller banks—especially those concentrated in real estate lending—could go under, the nation's banking giants face less danger."

 

[brewer12345]

How shall I put this? 76 problem banks and thrifts out of 8,500+, not all of whom will actually fail? So less than 1% are even "problem" institutions? Pardon me for not running for the hills.

For several years there have been an artifically low number of bank failures, since even the inept and overly aggressive banks couldn't manage to blow themselves up. Now that the environment is less friendly, it would appear that we are getting back to a long term normal level of bank failures, along with a long term normal level of loan losses, etc. So while it may seem like the world is ending, this is just what normalized loss/failure levels look like over the long term.

So do I think more banks will fail? Sure. But it is far from clear that this is a big deal, and I am reasonably confident that the failed banks will be mostly smaller banks in the worst real estate markets, and many/most of them will not be publicly traded (less access to new capital).

 

[Razor]

How shall I put this? 76 problem banks and thrifts out of 8,500+, not all of whom will actually fail? So less than 1% are even "problem" institutions? Pardon me for not running for the hills.

For several years there have been an artifically low number of bank failures, since even the inept and overly aggressive banks couldn't manage to blow themselves up. Now that the environment is less friendly, it would appear that we are getting back to a long term normal level of bank failures, along with a long term normal level of loan losses, etc. So while it may seem like the world is ending, this is just what normalized loss/failure levels look like over the long term.

So do I think more banks will fail? Sure. But it is far from clear that this is a big deal, and I am reasonably confident that the failed banks will be mostly smaller banks in the worst real estate markets, and many/most of them will not be publicly traded (less access to new capital).

Lets see now. Would Bernanke and the FDIC give us the worse case scenario or would they sugar coat it not to cause panic. I would wager things are alot worse than they make them out to be and believe we will see both more small and large bank failures before this mess is over. They were all using the same lax standards for lending money and did not want to miss out on the easy money.
Sometimes you have to read between the lines.

 

[brewer12345]

I would wager things are alot worse than they make them out to be and believe we will see both more small and large bank failures before this mess is over.

Based on your painstaking evaluation of zero banks. Very credible.

I am done trying to teach this pig[-]let[/-] to [-]squeal[/-] sing.

 

[Razor]

Based on your painstaking evaluation of zero banks. Very credible.

I am done trying to teach this pig[-]let[/-] to [-]squeal[/-] sing.

Obviously the problem with you is you think you are a lot smarter than you are.

 

[brewer12345]

"Razor has not made any friends yet"

I am shocked, shocked I tell you.

Another addition to the iggy list. Say hello to ladelfina for me.

 

[Razor]

"Razor has not made any friends yet"

I am shocked, shocked I tell you.

Another addition to the iggy list. Say hello to ladelfina for me.

Not here to make friends. I am here to get other opinions and learn. It is kind of funny how some dish it out regularily but are so thin skinned they can not take it themselves.
Here is some interesting reading:
American banks | Fear of failure | Economist.com

 

[ziggy29]

"Razor has not made any friends yet"

I am shocked, shocked I tell you.

Until I read this and looked through all the stuff in my profile, I didn't even know there *was* such a thing.

 

[Gumby]

You know, you guys could conduct this pissing contest by pm and spare the rest of us.

 

[Razor]

You know, you guys could conduct this pissing contest by pm and spare the rest of us.

I'm done.

 

[wolfbay]

Balance sheet bull

No one knows how many banks will fail because many have assets that have not been "marked to market" In other words the institution tells us how much these assets are worth , not the market.This is the reason there is no trust between institutions.Balance sheets don't tell us the real value of the crap on the books.Time will tell but I'd be real skeptical about anyone calling a bottom in financials.

 

[ChrisC]

No one knows how many banks will fail because many have assets that have not been "marked to market" In other words the institution tells us how much these assets are worth , not the market.This is the reason there is no trust between institutions.Balance sheets don't tell us the real value of the crap on the books.Time will tell but I'd be real skeptical about anyone calling a bottom in financials.

Great point. Balance sheets are a lot of crap, when you're marketing to market major asset portfolios on the books of a bank. And, of course, no one can tell from reading a balance sheet the off-balance sheet liability exposure reflected in accounting footnotes, if documented.

 

[FinanceDude]

Lets see now. Would Bernanke and the FDIC give us the worse case scenario or would they sugar coat it not to cause panic. I would wager things are alot worse than they make them out to be and believe we will see both more small and large bank failures before this mess is over. They were all using the same lax standards for lending money and did not want to miss out on the easy money.
Sometimes you have to read between the lines.

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.............