Bank failures are piling up
I’m guessing the FDIC has told its employees what they’ll be doing on Friday nights for a long time to come. So far this year, the government has seized 115 banks, the most in a year since 1992. Nine were taken over last Friday, including one downstairs from Marketplace.
Nine banks in one day is the most so far this year. US Bank was handed the keys to 153 branches in California, Illinois, Texas and Arizona. They were all divisions of a Chicago-based bank called FBOP Corp. 68 of the branches belonged to Cal National, which shares a building with Marketplace.
I wasn’t around to see it, but I hear this place was crawling with feds. From AP:
About 100 FDIC employees arrived at the CalNational headquarters in downtown Los Angeles around 6:15 p.m. They were seen fanning out into various offices around the building, a squat concrete structure that prominently displays the failed bank’s name.
Most likely, this is only the beginning:
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 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.
Not to worry, the money deposited in these banks is safe, insured by the FDIC — for the time being, anyway. The FDIC is being bled dry, but it has asked about 8,000 banks to pay in advance the premiums that would’ve been due over the next three years, in order to replenish its fund. The FDIC can also tap a credit line at the Treasury, although it’s been reluctant to do so because that would be borrowing from the taxpayers. Perish the thought.
US Bank hasn’t said what will happen to the employees of the branches it just obtained. But clearly, there are some new people working downstairs. I overheard bank employees discussing where they could get breakfast around here. The cafe downstairs flips some nice pancakes.
But flipping houses has turned into flipping banks.
Cheers to trustworthy journalism!
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