Daily Graphic: FDIC Bank Seizures This Year at 45 Nearly Double Those Seized in Recession’s First Year
Five more banks were seized by the Federal Deposit Insurance Corp. over the weekend in Georgia, Minnesota and California. During the first year of the current recession – 2008 – 25 FDIC insured banks failed. Little more than halfway through 2009 this year’s total is 45.
Daily Graphic: The Incredible Shrinking FDIC Reserve Fund
The data below came from the FDIC’s Graph Book. Over thirty banks have failed this year and 25 failed last year. The Deposit Insurance Fund, the fund with which the FDIC essentially eats portions of bank failures is roughly one-fifth of its 2006 value. The chart below represents the percent of FDIC insured deposits currently in the fund. In other words, about one quarter of one percent of the FDIC’s potential total liability is in their reserve. This fund has shrunk drastically during the current recession.
PWC: U.S. Will Adopt a ‘Bad Bank’ Plan
From MarketWatch:
The U.S. government will eventually adopt a “bad bank” plan to purchase toxic assets from struggling lenders, despite avoiding such a solution so far, accountancy firm PricewaterhouseCoopers said Wednesday.
A government “bad bank” should be set up quickly and be focused on the largest institutions, the firm explained, noting that Germany, Switzerland and Ireland have already taken this approach.
“The crisis is about to enter a new phase where efforts to remove troubled assets from bank balance sheets must be accelerated,” PWC said. “U.S. government interventions to date have stabilized individual institutions, but have not created a functioning market and pricing mechanism and therefore have had little impact on reviving the broader markets.”
Some government initiatives have had the opposite effect, the firm added.
Bill Summary: Senate Passed Credit Card Accountability, Responsibility, and Disclosure Act
The bill, which calls for credit card agreements to be written in “plain English,” and would protect consumers from abusive practices such as surprise rate increases passed the U.S. Senate by a vote of 90 to 5. The full summary of the bill’s provisions, as provided by the Senate Banking Committee can be viewed by clicking the pdf below.
Click for Credit Card Bill Summary
Daily Graphic: After The Stress Tests, Confidence in Banks Up Slightly
Text: Secy Tim Geithner Remarks to Independent Community Bankers, May 13
(Source: U.S. Dept. of the Treasury)
Thank you, Mike and Cam Fine, for your leadership of the ICBA and for your work on behalf of community banks.
Everyone here should know that three days after I was sworn in as Treasury Secretary, Cam Fine was in my office talking about the ICBA.
Community banks play a vital role in our financial system and a central role in our economy.
Yours are the banks where children open their first savings accounts and then come back years later to get a small business loan or to get help buying their first home.
In a time when financial innovation has put more and more distance between borrower and ultimate lender or investor, yours are the banks where staff and customers greet each other by first name, and where relationships still define the business of banking.
Of the over 8,300 banks in America, 92% are small or mid-sized banks, with assets below $1 billion.
Stress Tests May Have Been a Game With Banks Helping to Set the Rules
from the Wall Street Journal:
The Federal Reserve significantly scaled back the size of the capital hole facing some of the nation’s biggest banks shortly before concluding its stress tests, following two weeks of intense bargaining.
In addition, according to bank and government officials, the Fed used a different measurement of bank-capital levels than analysts and investors had been expecting, resulting in much smaller capital deficits.
from Reuters:
At least half of the banks pushed back against the preliminary findings of the tests, the Wall Street Journal said, citing people with direct knowledge of the process.
Citigroup’s capital shortfall was reduced to $5.5 billion from about $35 billion after bank executives persuaded the Fed to include future capital-boosting impacts of pending transactions, the story said.
Wells Fargo’s shortfall was cut to $13.7 billion from $17.3 billion and Fifth Third’s was reduced to $1.1 billion from $2.6 billion.
Video: Ken Lewis on Stress Tests
Transcript: Obama Weekly Address – Credit Card Reform, May 9, 2009
(Source: White House Press Office)
Good morning. I want to briefly share some news about our economy, and talk about the work that we’re doing both to protect American consumers, and to put our economy back on a path to growth and prosperity.
This week, we saw some signs that the gears of America’s economic engine are slowly beginning to turn. Consumer spending and home sales are stabilizing. Unemployment claims are dropping and job losses are beginning to slow. But these trends are far from satisfactory. The unemployment rate is at its highest point in twenty-five years. We are still in the midst of a deep recession that was years in the making, and it will take time to fully turn this economy around.
We cannot rest until our work is done. Not when Americans continue to lose their jobs and struggle to pay their bills. Not when we are wrestling with record deficits and an over-burdened middle class. That is why every action that my Administration is taking is focused on clearing away the wreckage of this recession, and building a new foundation for job-creation and long-term growth.
Full Text: Geithner Statement on Stress Test Results
(Source: U.S. Dept. of the Treasury)
This afternoon, the Federal Reserve and the national banking agencies released the results of the stress tests – the most comprehensive, forward looking review of our nation’s largest banks ever undertaken. These tests will help ensure that banks have a sufficient capital cushion to continue lending in a more adverse economic scenario. They will provide the transparency necessary for individuals and markets to judge the strength of the banking system.
The Daily Graphic: St. Louis Fed Chart – Mortgage Denial Rates by Loan Type, 1999 to 2008
The chart below comes from the St. Louis Fed’s National Economic Trends for May. It appears lenders did tighten their purse strings, but perhaps not enough, nor quickly enough.
Bank Stress Tests – Six of 19 Will Need Further Capital
While some of the lenders may need extra cash injections from the government, most of the capital is likely to come from converting preferred shares to common equity, the people said. The Federal Reserve is now hearing appeals from banks, including Citigroup Inc. and Bank of America Corp., that regulators have determined need more of a cushion against losses, they added.
By pushing conversions, rather than federal assistance, the government would allow banks to shore themselves up without the political taint that has soured both Wall Street and Congress on the bailouts. The risk is that, along with diluting existing shareholders, the government action won’t seem strong enough.
The Daily Graphic: U.S. Investment Bankers Still Feeding at the Trough
The graphic below is from the New York Times. It appears that executive pay is not missing a beat, even though most of Wall Street’s top management have failed their firms and the country miserable over the past few years.
Click the graphic for full-size view.
The Daily Graphic: 2009 U.S. Bank Failures Already More Than First Year of Recession
Four Banks Seized by Feds This Week; 2009 Failures Already Outstrip 2008
Friday’s Failures to tap FDIC fund for nearly $700 million
Federal Deposit Insurance Corp. regulators seized four more banks Friday night bringing the total number of 2009 bank failures to 28.
In all of 2008, during the first year of the recession, 25 U.S. banks failed.
Joining the FDIC’s Failed Banks List on Friday night were:
- First Bank of Idaho, Ketchum, ID
- First Bank of Beverly Hills, Calabasas, CA
- Heritage Bank, Farmington Hills, MI
- American Southern Bank, Kennesaw, GA
The First Bank of Idaho will be acquired by U.S. Bank. The cost to the FDIC’s Deposit Insurance Fund will be $191.2 million. All First Bank branches will reopen by Monday as U.S. Bank branches.
The First Bank of Beverly Hills will not be acquired. The FDIC will mail checks covering insured deposits to bank customers. First Bank of Beverly Hills will cost the Deposit Insurance Fund $394 million.
Heritage Bank branches will reopen on Monday as branches of Level One Bank. FDIC cost for Heritage’s failure is estimated at $71.3 million.
American Southern Bank will be acquired by Bank of North Georgia. The FDIC says American Southern’s failure will cost the Deposit Insurance Fund $41.9 million.
The Daily Graphic: Americans Losing Confidence in Banks
From Gallup – go read the story and for more on the survey.
Video: Geithner Tells Watchdogs He’s No Back-Door Man on Nationalization
… But is he the Lizard King?
Visit msnbc.com for Breaking News, World News, and News about the Economy
Full Text – Document: Special Inspector General on TARP – Bailouts Ripe for Abuse – Barofsky
Click for SIGTARP Report
Full Text: SecTreas Written Testimony, TARP Oversight, April 21
Treasury Secretary Tim Geithner
Written Testimony
Congressional Oversight Panel
Introduction
Good morning. Thank you for the opportunity to appear before you.
The challenges that our financial system faces are complex, interrelated, and the result of developments over many years. Earlier in this decade, a combination of fundamental factors and financial innovations generated unsustainable bubbles in many housing markets across the country. When those bubbles began to burst, starting in early 2006, housing price declines led to a sharp acceleration in mortgage delinquencies and charge-offs. Those unanticipated losses revealed deep-seated problems in our financial and economic systems. A protracted period of rapid innovation, excessive risk taking, and inadequate regulation produced a financial system that was far more fragile than was generally appreciated during the boom times.
Text-Document: Geithner Letter to Congressional Oversight Panel, April 20, 2009 – Status of TARP Funds
Click for Full Geithner Letter & Charts
