News of the finance

Tampa, FL - The leadership of the Southern Party of Florida has put up another red flag due to the plummeting economy and has issued a general "heads up" warning to all Southron consumers to be weary of your bank / credit union. This week California-based IndyMac crashed leaving millions of customers in the dark and without their hard earned money for the better part of a week until the FDIC stepped in for the first time since the Great Depression to take over IndyMac until its clients can find bank services elsewhere.

Even with the $100,000 FDIC insurance refund it has been estimated that IndyMac customers that had over $100K lost a combined $43 Million dollars that will never be refunded. Most of the lost money did not come from wealthy customers but instead from responsible middle to lower class customers whom saved for retirement and had huge 401K accounts.

Southron economic experts with the University of Georgia, Florida and Alabama fear that as the "Baby Boomer" generation retires and begins to cash their savings and 401k investments out we will see more banks and credit unions collapse under the heavy economic strain.

According to the U.S. Department of the Treasury 73% wealth stored in banks and credit unions are held by baby boomers and over 89% of bonds, 401k's, pensions, and stock investments are held by baby boomers.

Doug Rivers a economist from the University of Florida had this to say about the economic storm that is headed our way...

Our economy since the late 1970's has been powered by the baby boomer generation whom inherited it from their parents whom were the World War II generation, whom has since fully retired and have begun to die off.

The next generation... generation X (1980's - 1990's) have not been saving like their parents, or their parents before them and  a lot of it has to do with the greed of the baby boomers whom were largely behind the recent housing spike and has made it hard for their children (Gen X) whih had caused our economy to be stale for the past 20 years.

Currently our economy without the baby boomers money in the banks is too weak to stand... once the baby boomers begin to retire over the next 5 years Gen X will be expected to carry the bulk of the economic weight and given the current financial reports out they will not be able to do it. For example a recent housing report shows that 98% of baby boomers own property or a house of some kind while only 23% of Gen X owns property, the rest of Gen X rents property or lives with their parents still.

I believe that we are headed for another Great Depression due to the greed of the baby boomers and individuals that rent out property and thus keep the cost of houses out of reach of Gen X. Housing is the key to the economy, and right now its in the gutter, mix that with energy and food prices soaring threw the roof thanks to speculators and greedy wall street traders and you have a recipe for another Depression... Mark my words IndyMac is the first and will not be the last... I urge all Southerners to keep some cash under their mattress or in a coffee can some where for a rainy day.

But, bank industry experts in Florida say most banking customers have little to worry about; they insist that the nation's banking industry overall is sound.

In Florida, nearly all banks and credit unions have seen what's called "nonperforming assets," largely delinquent loans and repossessed property, increase significantly in the past two years, according to data from banking analysts. Still, those nonperforming assets are low by historical standards, experts note, so there's no cause for widespread alarm.

BauerFinancial, a Coral Gables-based research firm that analyzes and rates banks, gives only two Bay-area institutions below-adequate marks for financial strength: Old Harbor Bank of Clearwater and Bay Gulf Credit Union of Tampa. That's out of 63 banks and credit unions with corporate headquarters in the area.

Lutz-based banking industry analyst Richard Bove, of investment banking firm Ladenburg Thalmann, said the vast majority of banks nationwide are in no danger of failing. Bove primarily focuses on large publicly traded banks.

"We're far away from the devastation of the late 1980s and early 1990s," Bove said, referring to that era's Savings and Loan crisis, during which hundreds of S&Ls went under, in part because of heavy exposure from real estate lending.

Banking has taken center stage recently with the failure of California-based IndyMac and worries about the future of mortgage giants Fannie Mae and Freddie Mac. Other banking giants aren't facing insolvency, but have posted big losses, such as Wachovia Bank, which lost $369 million in its most recent quarter, and Citibank, which lost $881 million.

Many banks operating in Florida also have posted losses recently, as increases in delinquent loans and repossessed properties hit the bottom line.

In general, banks aim to keep their nonperforming assets less than 2 percent of total assets, said Karen Dorway, president of BauerFinancial.

With foreclosures rising and real estate prices falling in the Tampa Bay area and statewide, the number of banks above that threshold has shot up. Of the 390 banks tracked by BauerFinancial that operate in Florida, 131 - or one-third - have nonperforming assets exceeding 2 percent.

Many of the hardest hit banks and credit unions are in Southwest Florida and Southeast Florida, which had some of the biggest spikes and sharpest declines in real estate.

Locally, Tampa's Bay Gulf Credit Union has taken hits because of problems in its auto and real estate loan portfolios. These problem loans caused the credit union to take a charge against earnings last year and the first part of this year, resulting in a loss of about $3.1 million last year and a loss of about $671,000 in the first quarter of 2008.

Despite the losses, Bay Gulf's chief executive officer, Bill DeMare, said the credit union is "well-capitalized," meaning it has enough money in reserve. "We feel pretty confident going forward," DeMare said.

Among locally based financial institutions, Bay Gulf and Old Harbor Bank of Clearwater each received two out of a possible five stars in BauerFinancial's rating system.

A rating of zero stars is the lowest level of financial strength, and five is the highest.

The ratings take into account the financial institutions' level of capital, profitability, nonperforming assets and other factors.

Old Harbor Bank's chief executive, William Short, could not be reached for comment Wednesday.

The remaining 61 banks and credit unions based in the Bay area, primarily small community banks, received scores of three stars, or adequate, to five, or superior. No local banks or credit unions received ratings of zero or one star.

"We're looking at an industry that's not as healthy as it was four or five years ago, but it's still in good shape," said Dorway, the BauerFinancial president.

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