In spite of TARP and other federal government efforts, a Bloomberg article published over the weekend shows just how bad things still are in the banking sector. This published by Bloomberg on December 19, 2009 (highlighting mine). Only portions of the article are reprinted here. For the full article click below:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aA4tDKBIB6Ek
Seven U.S. banks were seized by regulators, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.
Banks with $14.4 billion in total assets were closed yesterday in six U.S. states, the FDIC said in statements on its web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.
Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.
‘Larger Number’ of Failures
The budget “will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary,” FDIC Chairman Sheila Bair said in a statement. Yesterday’s bank closings will cost the agency about $1.8 billion, according to the FDIC statements.
U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody’s Investors Service said last month.
The following table lists the banks seized yesterday. Asset figures are in millions of U.S. dollars. Click on the bank name to see the FDIC’s statement on the closing.
| FAILED BANK | BUYER | ASSETS |
| First Federal Bank Santa Monica, California |
OneWest Bank Pasadena, California |
6,100 |
| Imperial Capital Bank La Jolla, California |
City National Los Angeles |
4,000 |
| Peoples First Panama City, Florida |
Hancock Bank Gulfport, Mississippi |
1,800 |
| New South Federal Irondale, Alabama |
Beal Bank Plano, Texas |
1,500 |
| Independent Bankers’ Springfield, Illinois |
None | 585.5 |
| RockBridge Commercial Atlanta |
None | 294 |
| Citizens State New Baltimore, Michigan |
None | 168.6 |
While some failed banks are being purchased, others are not. The above chart reveals that just over one billion in assets were assumed by the taxpayers. Banks are still failing and the FDIC is boosting its budget for next year “just in case” further intervention is required.
Bet on it.
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