News of the finance

The FDIC shuttered nine banks on Oct. 30, 2009, bringing the total for the year so far to 115.

Yesterday’s closures will cost the FDIC an estimated $2.5 billion, combined.

According to an AP report (via Clusterstock):

Regulators shut California National Bank of Los Angeles and eight other banks as the weak economy continues to produce a stream of loan defaults.

The banks closed by the Federal Deposit Insurance Corporation were in California, Illinois, Texas and Arizona. They were divisions of privately held FBOP Corp., a Chicago-based bank holding company.

…

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the deposit insurance fund. It has fallen into the red.

Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.

…

The 115 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.

…

The 115 bank failures this year compare with 25 last year and three in 2007.

…

The number of banks on the FDIC’s confidential “problem list” jumped to 416 at the end of June from 305 in the first quarter. That’s the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.

Also, be sure to check out this interactive visual of recent bank failures from the Wall Street Journal. The graphics are great. They really help put the whole mess in perspective.

Congressman Rep. Ron Paul – Last week I was very pleased that the Financial Services Committee held a hearing on the Federal Reserve Transparency Act, HR 1207. The bill has 295 cosponsors and there is also strong support for the companion bill in the Senate. This hearing was a major step forward in getting the bill passed.

I was pleased that the hearing was well-attended, especially considering that it was held on a Friday at nine o’clock in the morning! I have been talking about the immense, unchecked power of the Federal Reserve for many years, while the attention of Congress was always on other things. It was gratifying to see my colleagues asking probing questions and demonstrating genuine concern about this important issue as well.

The witness testifying in favor of HR 1207 made some very strong points, which was no surprise considering the bill is simply common sense. It was also no surprise that the witness testifying against the bill had no good arguments as to why a full audit should not be conducted promptly. He attempted to make the case that the fed is already sufficiently accountable to Congress and that the current auditing policy is adequate. The fact is that the Fed comes to Congress and talks about only what it wants to talk about, and the GAO audits only what the current laws allow to be audited. The really important things however, are off limits. There are no convincing arguments that it is in the best interests of the American people for anything the Fed does to be off limits.

It has been argued that full disclosure of details of funding facilities like TALF and PDCF that enabled massive bailouts of Wall Street would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.

If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don’t want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore.

More

It is only fitting that on Halloween the Federal government is increasing the number of zombies among us.

Federal bank regulators issued guidelines allowing banks to keep loans on their books as "performing" even if the value of the underlying properties have fallen below the loan amount.

The rationale?

While CRE (commercial real estate) borrowers may experience deterioration in their financial condition, many continue to be creditworthy customers who have the willingness and capacity to repay their debts. In such cases, financial institutions and borrowers may find it mutually beneficial to work constructively together.

Nothing inspires confience in me like the phrase “financial institutions and borrowers may find it mutually beneficial.” Especially since banks are not required to only apply this rule to “creditworthy customers who have the willingness and capacity to repay their debts.”

I really can’t top what Doug McIntyre wrote at DailyFinance.com:

The FDIC appears simply to be taking losses that would be incurred in the normal course of business and pushing the true accounting for them into the future. It is to the political benefit of Washington to make it appear that the banking sector is getting better. It also probably helps the FDIC, which is essentially insolvent, from having to come up with billions of dollars to insure deposits at failing banks.

Some can argue that this regulation just does for commercial real estate what had already been done for home mortgages. In April, the Financial Accounting Standards Board approved a new set of rules allowing financial firms to fiddle with how big their real-estate losses are. (New accounting rules let bankers set the value of their own toxic assets)

When I use a word," Humpty Dumpty said in rather a scornful tone, "it means just what I choose it to mean – neither more nor less.”

For the past nine months or so, the business media has predicted the dropping of the proverbial “other shoe”: commercial loan portfolios on bank balance sheets. As the economy crashed, tenants failed, rents weren’t paid, new prospects disappeared.  These are value drivers of commercial real estate.  You might recall the doomsday prediction that by the summer 2009, the commercial loan portfolios would be in full death spiral taking banks and developers with them.  Well here we are at Halloween and the predictors were wrong.

And now this.

The Wall Street Journal just reported here that “Banks Get New Rules on Property” thus all but assuring that the shoe wont drop. Regulators are going to back off their aggressive demands that lenders clean house: the banker’s game of “extend and pretend” now comes with the governmental seal of approval.

Clearly this ruling takes the pressure off of banks to aggressively clean their balance sheet. Prior to the rule change, falling values and loan covenants put the bankers in a position of demanding action.  In many cases, this pressure would force a change in property ownership and recognize the current, though temporal, lower valuations.

The new policy may have a couple effects, both intended and unintended.  First, the vulture funds created to take advantage of the anticipated RTC style feeding frenzy may not get their carrion.  These funds were relying on banks to aggressively light the fire sale.  Without pressure from the banks, developers and owners may not have to sell at today’s values and most likely, they wont.  The net result is that these vulture funds may not find enough property to purchase or may end up buying garbage real estate. Not what they had intended.

Secondly, this ruling may keep the lending and real estate markets in their current frozen state and prolonging this painful real estate recession. If there are no willing sellers at current valuations, there will be no transactions. As they say, it takes two to tango.

If you own commercial real estate that is in trouble, this rule change is likely good news. If you were hoping to pick up distressed property on sale, this ruling is bad news. 

Will I be able to keep my current insurance plan? Of course you can. For as long as I want? Of course. Will the cost go up? Of course not. And the quality of my healthcare? Perfect, the best ever….

These are the standard talking points of the democrat party’s attempt to brainwash Americans into thinking that we can enact a 3 trillion dollar healthcare program, and won’t cost anyone a dime more. What’s worse, is they claim a public option has to be a part of this plan for it to be functionally productive. In reality, neither is a valid option. Does this administration really want to fix it? Hardly. There are many other remedies that can be enacted slowly and incrementally that many pundits agree would be successful reining in the costs. But thats not what this is really about. This plan’s whole purpose is to create a giant government monolith, one that will control 1/6th (more) of the free market economy than it does today. Remember, the government already controls GM (just today GM asked for another 5.6 billion) and Chrysler,  Fannie Mae and Freddy Mac, and banks and insurance companies by the dozens. In addition, it now has complete control of the Student College Loan Program as it has been taken completely out of private funding sources. If healthcare passes in it’s current version, this will result in the government controlling 40-45% of all the free market assets it did not have any vested interest in just a few years ago. Very troubling indeed.

So why you ask? So we can continue to take another step in the slow, deliberative slog towards a socialist-type government.

More to follow…….

Ec

Yes Friends I follow bankimplode.com and read the regular reports. It is now out there that 150 more Banks at least are in severe trouble and are at risk of closing. The fact is we have a mess on our hands.

Item cash for Clunkers cost $24,000 per Car. Not generally reported is it is hurt very much the low end of the Used Car Market. OF cheap cars that low income folks can only afford. The cars were destroyed. They could have been sent to Automotive Repair programs at schools and donated to Non Profits. Or put in a pool for Used Car dealers to sell to low income Americans.

That would have preserved assets instead of shredding them. Everything Obama touches turns to excrement. It is shocking to see the ineptness of his Administration. Now you add to that the lies of Jobs being saved.

Wake up USA there is no established metrics to measure Jobs saved. It is a work of Spin and Fiction. David Axelrod is no longer able to hide the Emperor has no clothes on. And that Obama’s pretty speeches reveal a Man bereft of real life experience in Capital markets, Business, Economics, Military strategy, Corporate or Business Governance.

The Dog and Pony Show that so excited the Assholes at FireDoglake who can kiss my hairy backsides. That Obama showed to meet the 18 KIAs was superior to his predecessor shows that FireDogLake’s boot lickers no Zero about the Military.

Also note that FemiFascist and FemHag Bonnie Erbie who hates Men. Is having a hissy fit over Obama playing basketball with Men only. Ms. Erbie is an idiot. If you like I do like to play East Coast very physical Basketball it is not a place for a Woman. As I will run her over to get the ball. I have literally Run over Men driving hard to the basket. Do it a couple of times you get out of my way or you get hurt.

And to Amanda Hess and Ms. Amanda Marcotte of pandagon. Are you nuts? No reasonable Men are suggesting that consuming reasonable amounts of Adult Beverages justifies Rape. Get over it Amanda. You are an idiot. What we are saying is predatory Males will take advantage of the vulnerable. That includes vulnerable Men too. Do you not understand that harsh truth about humanity???

Feminists want to live in a world that does not exist. And demand that Governments enforce their utopian ideals on the rest of us. They want misogyny to end in Central Asia, Africa, worldwide. How? Of course at the point of a US bayonet. Well young Men are dying in Central Asia to promote Feminism. That is the official policy of the US now.

Young White Christian Men who Pam Spaulding hates are dying to promote Gender Equality, Lesbian, Gay and Transgendered Rights. And dying daily. While their Commander in Chief dithers and cannot make a decision. This was disclosed to be a trait of Candidate Obama who voted Present on many occasions. You cannot call it in as Commander in Chief and a War President.

And we have seen ZERO improvement in Race Relations since the first Black President’s election. So we have gotten what exactly. We have gotten a mess made worse by a Man with limited life experience and Marxist Socialist Radical leanings. Intent on forcing more Government controls over our lives.

Get ready for the Second American Revolution. And tell the Dumb Asses in the Media especially on GE Network aka. MSNBC the public is very angry at what is happening. I am among them. On the wall right behind me is a photo of a Step Son in his Marine Dress Blues. When US Marines morale is hurting we have a problem.

By Bob L : NEWS AS I SEE IT!

How much more prof do you the American citizens need to see what the Obama Administration is doing.

How many more banks are going to be closed before any one sees who wants what or TOTAL Government control of all U.S. citizens.
___________________________________________________________

By TIM PARADIS and MARCY GORDON, AP Business Writers