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ANOTHER BANK MELTDOWN LOOMING-UPDATE 50-5 NEW FAILURES NEW TOTAL FOR 2010 TO 145
UPDATE ANOTHER HOUSING MELTDOWN
THE BEAT GOES ON UPDATE 2
BANKS BACK AT HIGH RISK-UPDATE 3
BROKEN LINK
THREE MORE BANKS FAIL UPDATE 4
BROKEN LINK
UPDATE 5 FHA CASH STRAPPED
UPDATE 6-2 MORE BANKS FAIL TOTAL 94
UPDATE 7-FDIC MAY ASK BANKS FOR BAILOUT
UPDATE 8-LARGE LOAN LOSSES LOOM AT $53 BILLION
UPDATE 9-FDIC LIKELY TO REQUIRE PREPAID FEES
One other bank failure brings 2009 total to 95 banks
http://money.aol.com/article/fdic-expected-to-require-banks-to-prepay/643551
UPDATE 10-BANK FAILURES NOW TOTAL 98
UPDATE 11-MORTGAGE MODIFICATION&FHA IN TROUBLE
UPDATE 12-UP MARKET FORECLOSURES ESCULATE
UPDATE 13-3RD QUARTER FORECLOSURES HIT NEW RECORD
UPDATE 14-VOLKER BREAK UP TOO BIG TO FAIL
Former Federal Reserve Chairman Paul Volker proposes beaking big banks up into functional entities. Separate investestment entity from savings and housing loan entities.
http://247wallst.com/2009/10/21/the-idea-of-breaking-up-the-largest-banks-gains-ground/#
UPDATE 15-BANK FAILURES HIT 100-FDIC IN THE RED
UPDATE 16-BANK FAILURES HIT 106
UPDATE 17 CIT GROUP FILES CHAPTER 11
This will cost the American taxpayers $2.3billion in TARP funds since the TARP fund were spent on common stock. If a student or graduate files bankruptcy their student loan that debt is not discharged by the bankrupty court. They still owe the money.
UPDATE 18-5 MORE BANK FAILURES-TOTAL NOW 120
UPDATE 19-4 MORE FAILURES BRING TOTAL TO 124
UPDATE20-6 MORE FAILURES BRING TOTAL TO 130
Not a normal bank failure as 2009 hits 130
UPDATE 21-3 MORE FAILURES BRING TOTAL TO 133
UPDATE 22-7 MORE FAILURES BRING TOTAL TO 140
UPDATE 23-FHA INDICATES FORECLOSERS TO RISE IN 2010
UPDATE 24-S&P SEES 1.8MILLION FORECLOSURES LOOMING
UPDATE 25-FDIC LIST OF TROUBLED BANKS GROWS TO 702 INCREASE OF 27%
UPDATE 26-FDIC CLOSES 4 MORE BANKS TOTAL 26 IN 2010
UPDATE 27-FORECLOSURES STILL 15% ABOVE 2009 LEVELS
UPDATE 28-FOUR MORE BANK CLOSURES AND ONE CREDIT UNION BANKS 26,27,28,29 FOR 2010
UPDATE 29-Foreclosure easing in big cities but still spreading
UPDATE 30-FDIC CLOSES 7 MORE BANKS 2010 TOTAL NOW 64
UPDATE 31-BANK FAILURES FOR 2010 TOTAL NOW 72
UPDATE 32-BANK FAILURES FOR 2010 TOTAL NOW 78
UPDATE 33-BANK FAILURES FOR 2010 TOTAL NOW 81
UPDATE 34-BANK FAILURES FOR 2010 TOTAL NOW 82
UPDATE 35-FALURES NEW TOTAL FOR 2010 TO 86
UPDATE 36-FALURES NEW TOTAL FOR 2010 TO 90
UPDATE 37-6 NEW FALURES NEW TOTAL FOR 2010 TO 96
UPDATE 38-7 NEW FALURES NEW TOTAL FOR 2010 TO 103
UPDATE 39-5 NEW FALURES NEW TOTAL FOR 2010 TO 108
UPDATE 40-1 NEW FAILURE NEW TOTAL FOR 2010 TO 109
UPDATE 41-1 NEW FAILURE NEW TOTAL FOR 2010 TO 110
UPDATE 42- 8 NEW FAILURES NEW TOTAL FOR 2010 TO 118
UPDATE 43- 1 NEW FAILURES NEW TOTAL FOR 2010 TO 119
UPDATE 44-NOW NEW FAILURES AVERAGE 14 PER MONTH FOR 2010-TOTAL 125
UPDATE 45-2 NEW FAILURES NEW TOTAL FOR 2010 TO 127
UPDATE 46-2 NEW FAILURES NEW TOTAL FOR 2010 TO 129
UPDATE 47-2 NEW FAILURES NEW TOTAL FOR 2010 TO 131
UPDATE 48-4 NEW FAILURES NEW TOTAL FOR 2010 TO 135
UPDATE 49-5 NEW FAILURES NEW TOTAL FOR 2010 TO 140
UPDATE 50-5 NEW FAILURES NEW TOTAL FOR 2010 TO 145
RECENT REPORTS FDIC RESERVES VERY LOW
According to the most recent reports the FDIC reserves are very low $10.4 billion compared to last year at this time $40 billion. The officials at FDIC seem to be implying that they are likely to go to the Treasury to replenish FDIC reserves. This would be accomplished by the FDIC borrowing $500 billion from the Treasury.
COMMERCIAL AND SMALL BUSINESS LOANS IN TROUBLE
While the housing sector is on rehab it has stabilized to a point. Housing is still in critical condition, but the commercial and small business sectors are now driving additional bank failures.
To date (9/1/2009) in this year 84 banks have failed and and additional 400 are on the FDIC critcal list. Thus the FDIC is looking to borrow from the Treasury to secure the depositors funds in future failed banks. Many of the brick and morter businesses holding loans from these troubled banks have abandoned the very buildings which secure the troubled loans. The businesses have filed bankruptcy and there is no market for the brick and morter buildings which they inhabited.
WILL THE FED MONITIZE MORE DEBT
If the FDIC borrows $500 billion from the Treasury the Treasury will have to generate the funds to lend the FDIC by selling long term Treasury bonds in the amount of that $500 billion. In mid August of 2009 the last time $500 billion in long term Treasury bonds were sold. They were initially sold to primary buyers on the private market with the implicit understanding that the Federal Reserve Bank would soon buy these bonds on the secondary market (Wink, wink, nod, nod).
Exactly two weeks after the sale to primary buyers the Fed bought these $500 billion worth of bonds on the secondary market. The Fed printed the money to make this purchase and thus another $500 billion of debt was monitized which devalues all long term T-bonds, and the US currency the value of which is based on the value of the T-bonds.
The reason for the implicit agreement of the FED buying the T-bond was that at present time is is no private market for additional US T-bonds. Our past practice of relying on foreign sources for financing our public debt is becomming less and less probable as a source of future financing.
Thus the almost certain result of the FDIC borrowing money from theTreasury will result in an additional monitazation of another $500 billion of debt, and further resulting devaluation of the US currency.
I WISH I HAD THE ANSWERS
I do wish I had the answers to this current situation. I don't enjoy spreading gloom and doom but I am reporting this situation as I see it, and is is a huge problem to the American people. I do note that current insured accounts of the FDIC to about $3.4 trillion. I will note that this is the precise situation of public debt and debt monitazion that caused Warren Buffit to warn that the USA was in danger of becoming a "Banana Republic".
I welcome all comments and suggestions or even corrections that any reader may have.
Comments
AuthorGary,
Sounds like BOA will be undercapitilized under Bazel 2. I'm sure Geitner and Bernanke will come through for them at least one more time.
Hey Tom I was reading PGrundy's story. My daughter worked for Citibank when they had her pushing credit cards as a phone teller. She said Citibank was a joke and she quit.
Oh, and the Bank of International Settlements is setting the tier 1 capital requirements to 8 percent. Bank of America has 5.8 percent. Hmmm.
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They let Bear-Sterns fail because all the Treasury members and the Chairman of the Fed are all Goldman-Sachs alumni, and this was their best chance to eliminate the compitition.
Here is a clue.
Look at the treasury department and see where the head hunchos came from. It answers the question why did they let Bear-Sterns fail.
I'm betting the house ths as depression written all over it. Big time!
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James,
At some point we can't keep kicking the can down the road. Real solutions must be found. They are most likely to be painful, but the longer they are delayed the more pain will have to be endured.
I agree, Tom. We are are serious trouble. It seems to me we should have taken our lumps last year instead of printing more and more money because I think it is going to make the crash worse than at the first. Yours is a fine article. Thank you for it.
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breakfastpop,
Thank for reading and your comments on the HUB. I hope you're right about the President and his administration being only clueless. I hope they are are not manipulating this situation to institute their own agenda. I hope the CHANGE that was offered in the campaign doesn't fit perfectly into this situation to create an emergency and make the people accept any kind of CHANGE.
If things get bad enough and enough people panic they may accept things they would never think of accepting in normal times.
I can't help remembering the old phrase "Desperate people do desperate things".
Great insightful scary HUB. Let's face it , we are in deep trouble and this President and this administration doesn't have a clue about the danger of our mounting debt. I don't think the financial sector does either. Apparently, no lessons were learned. It's deja vu all over again!
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pgrundy,
You are correct. I am shocked at the change of scope in customer service jobs. I alway thought the primary job of customer service was (duh) to provide service to the customer. To make CSR positions shills for selling products or services only leads to the low consumer confidence exihibited in the modern economy.
Sorry to hear about you losing your job. Even though it sounds like a job out of hell.
Tom, you'd be shocked at what customer service jobs have become. Serving the customer is often the last item of business. I became a CSR after a bad divorce 10 years ago--needed a good job and was working in my ex's business as the office manager--that wouldn't fly! lol! So I ended up at a multinational insurance company and moved to the bank after five years because it looked like there was more opportunity to get off the phones there. Wow, was I wrong. (Well, on the other hand, I'm off the phones now... thank God!)
I saw the trend to require sales thresholds as part of CSR work coming during my last year at the insurance company. All the supervisors were telling us to get ready for it; that you'd either do it or get it out because everyone was doing it. Now, it's pretty standard all around. Most CSRs are there to sell you something, not fix your problem. I agree, that's what's wrong with the corporate business model, but at this point they just don't care. They don't care what we want. They care what they want. The ideal corporate business model right now is provide nothing for lots of money. Just give us your money. Or, just shut up and give us your money.
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Tom
I also believe we are screwed, but we need to get back to The Constitution in our goverance of the USA, and all of our institutions both public and private. I believe this is a hopeful starting place.
Good hub....the party is over and the house is trashed! Like Pam said, "We are screwed!"
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pgrundy,
I am really astounded by your story. I always thought customer service was supposed to serve the public, and not to hawk a company's product. The pay level of $10/hr is totally not comeasurate with a sales requirement of $100,000/ month, and $1,000,000/month is ludicrous for a job of customer service.
Facts such as these are the reason consumer confidence is totally tanking.
Tom, I worked in the corporate call center of a major regional bank that was taken over by another regional bank in January of this year in a sale forced by Treasury. What happened was, my bank applied for TARP funds and Treasury denied their application and gave the funds to a bank in slightly better shape. Treasury made buying the bank I worked a condition of the other bank getting TARP money. A lot of bank failures are covered up by forced sales of this nature. So we aren't really even getting the truth, even looking at FDIC, which is bad enough.
I was only at the bank for a year and a half. I quit after I had what looked and felt like a heart attack at my desk. When I started, I had a $100,000 a month sales requirement just to keep my job (I was in CUSTOMER SERVICE, but we still had sales thresholds to keep from getting fired). By the time I left in October of last year, I had a sales requirement of $1 million per month to keep my job and I wasn't making it, not even sort of. I made $10 an hour.
The day Bear Stearns went belly up our bank's stock dropped 80% in a single day. When I quit, it was hovering around $1.25 a share. We got daily emails from corporate saying the bank wasn't in trouble, and to make sure to tell all the customers that. Customers just laughed at us or called us liars, which we were.
One lady, I'll never forget, when I trotted out the corporate BS just laughed and said, "Honey, I'm not trying to be mean, but your bank is at the top of the 'Most Likely to Fail Next' list. Your stock is in the toilet. You might have another week or two." We had two months.
SOOOOOOOOOOO many banks right now are solvent only on paper by the grace of creative accounting practices. When our bank was going down, every time I'd say "Our bank is going down," I'd get jumped on by supervisors and coworkers alike. I'll never work in the financial sector again. I'd rather muck our horse stalls. I never saw such irresponsibility and raw greed, and I was at the bottom of the pyramid. When I left, I think the janitorial staff had sales goals. It was all about busting butt to funnel that money to the top. Richard Fuld, Angelo Mozilo--those guys are fine. The rest of us? Not so much.
I'm still unemployed. That was probably my last job in this lifetime. I live in Michigan. I'm 56.
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Cheers Amanda Severn,
I fear we are quite in the same boat together. I enjoyed my time in the UK. I spent 4 months in Congelton in 1997 and 5 months in the Birmingham area in 1998-1999. I found the UK to be a truly beautiful country, and I made many friends during my stay. Most of them called me the colonist, LOL.
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pgrundy,
Thank you for your comments. I like you have trouble finding a silver lining in the current economic situation. Mostly because I never have seen such poor behavior in the financial sector. I am beginning to ponder this behavior since it seems it may be a global situation, and I find that scary. I am by nature a "glass half full" type of person so I will keep hoping for the best.
Tom, I don't suppose we're fairing too much better this side of the Atlantic, but various political shennanigans in the lead-up to next year's general election, are serving to keep the average punter's eye off the ball. It's hard to see how things are going to improve globally, and like Pam, I can see more problems to come.
We are still in meltdown mode but the government and Wall Street are pretending like we are not. No real long term solution is on the horizon and the shadow banking system that helped cause this mess continues unmolested. I don't think a recovery is coming. It's like you say, I hate to keep saying negative stuff over and over. People are so tapped out on doom and gloom, but honestly, we're screwed. (That's technical bank talk! lol!)
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bgamall,
Thank you for insightful comments. It looks like the trend in stocks of the last two days may at least delay a flight from bonds for a while. Ultimately the can is just being kicked down the road.
The Chinese and other foreign governments have their own financial troubles, and that will keep them from bailing the US out of this current mess. However if they start dumping T-Bonds the
s--t will hit fan.
We already have too many bonds for the world to swallow, unless the sheeple are scared out of stocks and into bonds by bad news. After all Bernanke is a bond salesman, primarily, as well as a buyer. He sells for the treasury by guaranteeing the dollar. We need bad news to guarantee the dollar.
On top of that, the Chinese are going to apparently walk away from the bad swaps sold to her national companies by our shyster banks. Serves the banks right.
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