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| Economy |
| Six more US banks fail |
| 2009-12-06 |
| Amid recession and loads of bad assets, six more banks have been shut down bringing the number of US banks failed in 2009 to 130. On Friday, the Federal Deposit Insurance Corp. (FDIC) took over AmTrust Bank -- the fourth-largest Cleveland-based bank to fail this year. With about USD 8 billion in deposits and USD 12 billion in assets, it is expected to cost the federal deposit insurance fund an estimated USD 2 billion. Last year regulators had told the bank to limit their loans since they were concerned that the bank's reserves against potential losses were dangerously low. AmTrust also had branches in Phoenix and Florida. New York Community Bank agreed to take over the deposits of AmTrust Bank and about USD 9 billion of its assets. The FDIC will hold the rest for eventual sale and the bank's 66 branches will reopen soon. Three other banks in the state of Georgia were also taken over by the FDIC on Friday: Tattnall Bank, of Reidsville with assets of USD 49.6 million and deposits of USD 47.3 million; Buckhead Community Bank, based in Atlanta, with USD 874 million in assets and USD 838 million in deposits and First Security National Bank, based in Norcross with USD 128 million in assets and USD123 million in deposits. Benchmark Bank in Aurora, Illinois, with USD 170 million in assets and USD 181 million in deposits was also shut down and so was Greater Atlantic bank of Reston, Virginia, with USD 203 million in assets and USD 179 million in deposits. The cloture of the three Georgian banks brought the number of bank failures in that state to 24 so far this year. Benchmark Bank was the 20th to fail in Illinois this year. The failure of Buckhead Community Bank is expected to cost the federal deposit insurance fund an estimated USD 241.4 million; that of Tattnall Bank, USD 13.9 million; Greater Atlantic Bank, USD 35 million; First Security National Bank, around USD 30.1 million and Benchmark Bank, around USD64 million. Over the next four years the FDIC expects the cost of bank failures to grow to about USD 100 billion. As buildings sit vacant, banks are suffering losses and are especially hurt by failed real estate loans and as development projects collapse, builders are defaulting on their loans. Since the height of the saving-and-loan crisis in 1992 the 130 failures have been the most in a year. They have cost the federal deposit fund over USD 28 billion so far this year compared with USD 25 billion last year and USD 3 billion in 2007. |
| Posted by:Fred |
| #6 KD might be right, but he's a little bit to catastrophe loving for me. I also don't think he understands the difference between credit deflation and normal deflation, or even what money really is. |
| Posted by: Bright Pebbles 2009-12-06 14:43 |
| #5 The Amtrust failure has some interesting aspects. The Feds have been extending them lifelines for over a year now, no bailouts, but going lightly on applying existing regulations to Amtrust's case. Thirteen months ago, after Cleveland's National City Bank failed & was taken over by PNC, an out of town bank, local Congressmen put pressure on the Feds to do more to save Cleveland banks. The Plain Dealer has been covering this very well the whole time, for those who care to keep themselves informed, a very small fraction, I know. For the last several weeks Amtrust's holding company withdrew its deposits from its own bank and sent them to PNC. Then on 11/30 the holding company declared bankruptcy while keeping Amtrust in business, thus putting its own assets out of reach of the FDIC. FDIC's delay on using 'prompt corrective action' as mandated by law much increased FDIC losses in the collapse of Amtrust. I would love to know what fraction of banks are actually insolvent at this moment, but the MSM isn't bothering to consider this, being consumed by health care reform and Tiger Woods. Karl Denninger opines that most banks are now, and have been for some time, insolvent. |
| Posted by: Anguper Hupomosing9418 2009-12-06 13:53 |
| #4 No, that's regional bank failures when they can't extend their commercial real estate construction loans any longer. |
| Posted by: Nimble Spemble 2009-12-06 09:19 |
| #3 Is that light at the end of the tunnel another Obama administration financial bailout coming? |
| Posted by: Besoeker 2009-12-06 08:21 |
| #2 Yes, if you miss enough classes from being too drunk. |
| Posted by: Glenmore 2009-12-06 06:52 |
| #1 Can you graduate from Harvard without being a certifiable moron? |
| Posted by: g(r)omgoru 2009-12-06 02:07 |