By request: Friday's bank closures 02-26

Weiss

Regulators shut down Carson River Community Bank in Nevada on Friday, marking the 21st failure this year of a federally insured bank.

The Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Carson City, Nev. It had $51.1 million in assets and $50 million in deposits as of Dec. 31.

I think that's it...but the elephant not to be overlooked is Fannie Mae's urgent request for another $15.3 BILLION from the fed.

TomB

Fannie Mae's $15.3 BILLION money pit won't be the end of it, though, as the administration has pledged to cover unlimited losses through 2012 for Fannie Mae and Freddie Mac, which replaced the $400 BILLION cap!

PerryHall

What was the typical bank failure rate when economic times were good? I'm curious for comparison purposes to current bad times.

Weiss

Between 2003 and 2008 the average was two banks a year:

Twenty-five banks failed and were taken over by the Federal Deposit Insurance Corporation (FDIC) in 2008, while 140 failed in 2009. In contrast, in the five years prior to 2008, only 11 banks had failed.

http://en.wikipedia.org/wiki/2008–2010_bank_failures_in_the_United_States

cohodk

The biggest assets on most banks' balance sheets are mortgages. When banks lend money on a deflating asset, there will surely be losses. This really isnt a big deal--there are too many banks anyway. This would/will be a bigger problem if we lose 25-50% of the banks, but that would be 2000-4000 failures.

As TomB mentioned, the much bigger "holes" are with FNM, FRE, AIG.

roadrunner

Fannie Mae's $15.3 BILLION money pit won't be the end of it, though, as the administration has pledged to cover unlimited losses through 2012 for Fannie Mae and Freddie Mac, which replaced the $400 BILLION cap!

Exactly. F&F will be used as the final resting place for trillions of illiquid mortgages, debt, and anything else the Treasury and FED can slip into it. When the FED needs to start lightening up on its hundreds of billions in illiquid mortgages guess who's the first choice to get them at a minimum of original purchase price?

Over the past several decades there has been a never-ending consolidation of the smaller banks being swallowed up by the bigger banks. I don't know if the # of banks has quite the meaning it did in the past considering the top 100 or 200 banks carry a huge % of the total system risk. F&F was uncapped precisely to set up another option for off-loading all the illiquid securities that the FDIC will be drowning in as each additional bank gets shuttered.

roadrunner

secondrepublic

interesting points RR

derryb

<< <i>What was the typical bank failure rate when economic times were good? I'm curious for comparison purposes to current bad times. >>



Here's the totals by number of banks, but more interesting would be totals by amount of dollars involved. Chart shows the peak of the savings and loan crisis was the worst for number of banks. I believe history will show the debt crisis of 08-? to have had a much bigger effect on the economy as a whole.

Also, "number of banks" does not include all the branches of that bank. A more realistic number would be to include all the branches. When the FDIC tells you on Friday they closed three banks, they may have acutally shut down 20 if you include branches.