FDIC Fund Strained by Bank Failures May Lift Premiums

FDIC Fund Strained by Bank Failures May Lift Premiums (Update2)
By Alison Vekshin
Aug. 11 (Bloomberg)

http://www.bloomberg.com/apps/news?pid=20601109&sid=a35CvKfLq65Q

"It's going to be a bloody, expensive mess for the banking industry," said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. "Healthy banks are paying for the mistakes made by failed banks."

The pace of bank closings is accelerating as financial firms have reported almost $495 billion in writedowns and credit losses since 2007. The FDIC's "problem" bank list grew by 18 percent in the first quarter from the fourth, to 90 banks with combined assets of $26.3 billion. A revised list is due this month. The insurance fund had $52.8 billion as of March 31.

Who pays when lenders fail?

Who pays when lenders fail?
Don't foreclose - keep borrowers in their homes
Ted W. Lieu
Thursday, August 7, 2008

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/08/06/ED361269K6.DTL

If there is any silver lining to the second largest thrift failure in U.S. history, it is this: the IndyMac bank collapse has ironically resulted in the nation's first foreclosure moratorium. The Federal Deposit Insurance Corporation, after taking over IndyMac, declared it would halt all foreclosures on the $15 billon worth of IndyMac mortgages and modify the loans to keep borrowers in their homes. In one fell swoop, the FDIC did what no presidential contender, governor, or legislator has been able to do: force a moratorium on a significant number of foreclosures.

IndyMac's dramatic collapse provides two important lessons learned. First, the bank's failure reminds us that preventing foreclosures helps everyone, including those who did not participate during the mortgage boom. Representing an Assembly district with several IndyMac branches, I know that customers who lost money on their uninsured deposits did so not because of their own doing, but because of a nationwide foreclosure crisis spiraling out of control.

IndyMac bank run: A sign of things to come?

IndyMac bank run: A sign of things to come?
Harry Koza
July 18, 2008

http://www.theglobeandmail.com/servlet/story/LAC.20080718.RKOZA18/TPStory/Business

That's kind of odd, since it was a substantial flameout. Indy was the second-largest mortgage lender in the United States, and the seventh-largest savings and loan, with $32-billion (U.S.) in assets and $19-billion in deposits - $1-billion uninsured. It was the biggest bank failure in years. Since 2000, according to the FDIC, there have been 32 bank failures in the United States, with IndyMac the fifth one so far in 2008 and bigger than all the other 31 put together.

The FDIC has another 90 to 150 banks on its list of "troubled" lenders, so it seems likely that there will be more banks going under in the months ahead. Somehow that doesn't seem to bode too well for all those predictions of a second-half recovery this year, you know, that mythical V-shaped chart form, dipping quickly into recession only to storm back up into a new boom.

Investors Moving Money to Swiss Banks

Investors Moving Money to Swiss Banks Fearing U.S. Sub-Mortgage Crisis and IndyMac Bank Closure
Kevin Wessell
Los Angeles, CA (PRWEB) August 5, 2008

http://www.prweb.com/releases/Offshore/Banking/prweb1177124.htm

Europe has multitudes of large, safe, banks without exposure to the damaging U.S. mortgage disaster. In contrast, many U.S. banks are sitting on shaky ground. It is said that two banking giants, Washington Mutual and Bank of America - with the acquisition of Countrywide Financial - have substantial sub-prime exposure. This is not to say one should necessarily lose faith in these giant organizations. It is just to say that they are feeling the financial pain of the recent disaster. First National Bank of Nevada, based in Reno, Nevada, and First Heritage Bank of Newport Beach, Calif., were both shut down by federal regulators recently.

IndyMac Collapse Fuels Fears About WaMu

IndyMac Collapse Fuels Fears About WaMu
by Wendy Kaufman
All Things Considered, July 17, 2008
http://www.npr.org/templates/story/story.php?storyId=92642046

Biggest U.S. Bank Failures: Four of the top 10 biggest failed U.S. banks and thrifts were based in California.

1. Continental Illinois National Bank, Chicago (1984) - $40 billion in assets
2. IndyMac Bank, Pasadena, Calif. (2008) - $32.2 billion (as of March 31)
3. American Savings & Loan, Stockton, Calif. (1988) - $30.2 billion
4. First RepublicBank, Dallas (1988) - $17.1 billion
5. Bank of New England, Boston (1991) - $13.4 billion
6. Gibraltar Savings, Simi Valley, Calif. (1989) - $13.4 billion
7. HomeFed Bank, San Diego (1992) - $12.2 billion
8. Southeast Bank, Miami (1991) - $11.0 billion
9. Goldome, Buffalo, N.Y. (1991) - $9.9 billion
10. City Savings (1989) Somerset, N.J. - $9.8 billion

Source: FDIC