U.S. banks have been dying at the fastest rate since 1992, mainly because of bad loans they made. Now the banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks.
Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history, and broker a sale of the Texas bank to Banco Bilbao Vizcaya Argentaria SA of Spain. Guaranty's woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation's worst lenders.
The toll of failed banks is mounting, with 80 institutions closed by regulators so far this year - the most since 1992 at the height of the savings-and-loan crisis.
The latest came Friday with the seizures of two small banks in Georgia and one in Alabama: ebank, located in Atlanta, with $143 million in assets and $130 million in deposits; First Coweta, based in Newnan, Ga., with $167 million in assets and $155 million in deposits; and CapitalSouth Bank, based in Birmingham, Ala., with $617 million in assets and $546 million in deposits.
The Federal Deposit Insurance Corp. was appointed receiver of the failed banks, and approved the sale of some or all of their assets and deposits to other institutions.
In contrast to the big bank failures early in the financial crisis, many of the recently shuttered banks were undone not by exotic mortgage products but by garden-variety loans.
At the same time, a knot of big, complex banks collapsing in recent months is sapping billions fro
Guaranty Bank, a deeply troubled Texas lender, was sold on Friday to Banco Bilbao Vizcaya Argentaria of Spain in one of the largest government-assisted deals offered to a foreign firm. Federal regulators seized Guaranty Bank and simultaneously brokered the
sale of its branches as well as most of the deposits and assets to BBVA
Compass, the Spanish bank’s American subsidiary. The government,
however, agreed to absorb most of the losses on $9.7 billion, or more
than 80 percent, of the Guaranty assets included in the deal.
NCR CEO William Nuti on why his firm stopped outsourcing production of automated
teller machines and can bring innovative new products to market faster by
building them itself in the U.S.
California Assembly Speaker Karen Bass plans to strip the most
controversial provisions from a Senate-approved plan that would have
trimmed the state's prison population by 27,000 inmates. The Assembly version would keep about 10,000 more inmates behind bars
and leave the state with a new, nearly $200 million budget hole, Bass
said early Friday.
While the private sector has shed 6.9 million jobs since the beginning
of the recession, state and local governments have added 110,000 jobs, according to this report issued on August 19, 2009.
Penny-pinching Americans are getting cold feet at the checkout —
thinking twice about spending and ditching items before they're rung up. They're leaving sweaters in the dress department, dumping cookies near
the grocery cashier and waiting until the last minute to judge needs
versus wants. Online, shoppers are consumers are abandoning their
virtual carts as they search for better deals.
The dollar will probably go up. Still, we’d stay away…
Here is Warren Buffett’s view:
“Last fall, our financial system stood on the brink of a collapse
that threatened a depression. The crisis required our government to
display wisdom, courage and decisiveness. Fortunately, the Federal
Reserve and key economic officials in both the Bush and Obama
administrations responded more than ably to the need.
“If we cannot
return to fiscal integrity because the public prefers profusion and prodigality
over balanced budgets, we cannot escape paying the price, which is even lower
incomes and standards of living for all.”
Hans F. Sennholz
“The
prerequisite for more economic equality in the world is industrialization. And this is possible through increased capital
investment, increased capital accumulation.”
Ludwig Von Mises
“The
Resources that government extracts from the private sector to pay for itself are
resources that are not available for the private sector to use in producing
more goods and services. When the
federal government takes money out of our pockets, we have less money to spend
or save. When the federal government
takes money from business, it has less money to use for investment, research,
o
The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week, a government report showed on Thursday, fanning worries of an anemic recovery from the worst recession in 70 years.
Reuters - Attendees at a job fair line up to gather information about a prospective employer in a Washington hotel, ...
Initial claims for state unemployment insurance benefits rose 15,000 to a seasonally adjusted 576,000 in the week ended August 15 from 561,000 the prior week, the Labor Department said. Analysts polled by Reuters had forecast new claims slipping to 550,000 last week from a previously reported 558,000.
This Bank Holiday is no 'Holiday' at all, but one similar to that
engineered by FDR in March, 1933 which finished the collapse of the
World's economy. Another forced “bank holiday” will likely lead to a
formal devaluation of the already broadsided U.S. dollar. But devalue
against what? The euro? Doubtful. Gold? Maybe, but highly doubtful -
or, devalued against the IMF basket of currencies, which is more
likely. When I posed the question of the actual reality of such an
event occurring to several of my sources including those within several
Federal Agencies (CIA, FBI, Attorney Generals office, DHS) I received
the following statement almost verbatim from each and every one of them
- "The way it will come down is that starting 8/24, no later than Labor
Day, groups of banks will be closed in certain regions of the country
for a week or so. They will open again, and then other groups of banks
in different regions will be closed; and on and on it will go, until
Bernie's whistleblower sends a chilling message. Memo to regulators: be forewarned about frauds in the credit-default swap market. They'll make Bernie Madoff's $65 billion fraud "look like small-time."
That's what Harry Markopolos -- Madoff's whistleblower ignored by federal investigators -- is saying anyway.
New York Post: [Markopolos] says there are evildoers out there who will make the Ponzi scum "look like small-time." Markopolos gave a speech to 400 of the faithful at the Greek Orthodox Church in Southampton and predicted major scandals will soon be revealed about the unregulated, $600 trillion, credit-default swap market. "To put it in simple terms, it is like buying fire insurance policies from five different insurance companies on your neighbor's house and then burning down the house," he said.
Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.
The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008’s second quarter.
Remember, Cramer said housing bottomed June 30th.
Jim, we haven't seen seen a decline in the second derivative. In fact, housing prices dropped by a RECORD 15.6% in the second quarter.
Record - you know, never dropped this fast year-over-year before? Yeah.
But remember Jim - you promised your viewers that it was over. That it was ok - and safe - to go back into the market. You in fact told everyone last night to buy stocks again, and you were in fact on an unmitigated pumpfest.
The facts don't bother you
WSJ's Brett Arends calls the period between Labor Day and Halloween the fright show, and with good reason.
He lists the following stock market crashes that have occurred during this period:
It was, of course, in September last year that Lehman collapsed and everything fell apart.
But then it was also September-October 2002 that the last bear market plunged to its lows.
The 1998 financial crisis? It began late August, and rolled on for two months.
The famous crash of 1987 came in October. But most people have forgotten that the market actually started sliding downhill in late August.
That's almost exactly what happened in 1929 too. The big crash came in October, but the market peaked just after Labor Day. Prices began falling through September, then tumbled further still.
The worst month of the Depression? September, 1931, when the Dow fell about 30 percent.
Hopefully deficits don't matter, because if they do, then boy are we screwed. Today's chart was put together by Diapason Securities analyst Sean Corrigan (via Alphaville), and it shows the stunning rise of outlays and similar collapse in receipts. The blue line is the real killer, though, as it shows just how meager our tax revenue is compared to outlays.
stagnant unemployment, shrinking tax revenue and a struggling economy threaten to quadruple the size of last year's federal budget deficit, raising more questions about the timing of costly proposals to overhaul health care.
As the White House and Congressional Budget Office (CBO) prepare to release new deficit estimates this month, several economists say the news is likely to be as bad as or worse than forecasts.
"This is going to be a very depressing outlook," predicts former CBO director Douglas Holtz-Eakin, top adviser to Republican John McCain in last year's presidential election. "They have just a nightmare in terms of these health care bills, which do nothing but make things worse."
A fiscal year 2009 deficit of $1.8 trillion was anticipated by the White House, $1.7 trillion by Congress. Reaching that level would produce a deficit four times last year's $459 billion deficit, just as Congress is considering health care overhaul plans that could
Comments mine Think Iceland and Socializing the Losses!
“The nation’s banks continue to hold on their books billions of dollars in assets about whose proper valuation there is a dispute and that are very difficult to sell,” said the Congressional watchdog panel headed by Harvard Law School professor Elizabeth Warren.
Warren's panel report really can't be viewed as anything but a veiled call for another bailout. It urged the Treasury to either expand its current program to soak up troubled assets, the Public-Private Investment Program, “or consider a different strategy.”
Since Warren believes in government regulation starting with how you tie your shoes in the morning, the thought of she means by a "different strategy,” should cause any liberty loving person to shudder. For her a reasonable solution would be nationalization of banks she deems to be operating with insufficient capital
Stocks slid on Tuesday after a prominent banking analyst warned that the sector's fundamentals have not yet improved, sparking a sell-off in bank shares.
Economic data showing an unexpectedly large fall in wholesalers' inventories added to the bearish sentiment.
The drop in inventories in June, which was nearly double expectations, suggests that businesses remained skeptical about a return in demand.
Financial stocks, which had gained about 25 percent in the last month, tumbled after Rochdale Securities analyst Richard Bove painted a gloomy outlook for the banking industry. He said bank stocks are trading on "fumes," and he expects a short-term pull-back in their stock prices.
Remember your parents reading you the story about the carefree lazy grasshopper and his friend the hard working ant? The story is updated for modern times.
Imagine that and the messiah wants to take over your healthcare????
Since the economic stimulus bill passed nearly six months ago, the Obama administration has repeatedly pledged that the money would reach middle America, seeping into the communities hardest hit by the recession.
But analysis of the most comprehensive list of stimulus spending to date found no relationship between where the money is going and unemployment and poverty.
To-date, your federal government has at best improperly lead the USA into a future that is dismal. Added to this unremarkable run are two thirds of the states buying themselves into debt with no way to pay it.
I will put to you a few way
Insanity doing the same thing over and over and expecting a different outcome. The video report does tell how dire the situation really is wow all along I was led to believe by the Resident that the first porkulus was working.
Yale economist Robert Shiller was on Bloomberg yesterday talking about the need for more action by the U.S. government to ward off a dreaded "double-dip" recession.
I love how the media (CNBC in particular) "spins" the weekly unemployment report.
Let's dissect it - again.
Continuing claims is the key number. It rose 69,000 from the week previous on a seasonally-adjusted basis.
But look down the table in that report. 139,291 people rolled off the continuing claims numbers into "extended benefits."
Those folks are still unemployed, yet they understate the continuing claims number by a whopping 140,000.
This is the distortion that creeps into the numbers, and over time it gets quite ugly. What's worse is that we're now starting to see people drop off the extended programs, and this will accelerate into August and beyond (although Congress is threatening to extend those benefit times once again.)
The market spiked on the release but again, the issue for the economy is consumption going forward. Government money dumps ultimately must be funded and while this has so far "worked", it cannot continue for
In the week ending Aug. 1, the advance figure for seasonally adjusted initial claims was 550,000, a decrease of 38,000 from the previous week's revised figure of 588,000. The 4-week moving average was 555,250, a decrease of 4,750 from the previous week's revised average of 560,000.
Wages and salaries, which drive recoveries in spending, fell 4.7 percent in the 12 months through June, the biggest drop since records began in 1960, according to Commerce Department figures released yesterday.
Never saw that coming (extreme sarc)
The percentage of U.S. homeowners who owe more than their house is worth will nearly double to 48 percent in 2011 from 26 percent at the end of March, portending another blow to the housing market, Deutsche Bank said on Wednesday.
Home price declines will have their biggest impact on prime "conforming" loans that meet underwriting and size guidelines of Fannie Mae and Freddie Mac, the bank said in a report. Prime conforming loans make up two-thirds of mortgages, and are typically less risky because of stringent requirements.
"We project the next phase of the housing decline will have a far greater impact on prime borrowers," Deutsche analysts Karen Weaver and Ying Shen said in the report.
Who Is Geithner Kidding?
The Treasury announced a record $75 billion quarterly refunding auction next week. The number of Treasury auctions have doubled from 36 to 72 over the past year. In the same breath, Treasury Secretary Tim Geithner "has pledged to reduce government borrowing to a sustainable path once the economy returns to firmer footing."
http://www.marketwatch.com/story/treasury-plans-to-sell-a-record-amount-of-debt-2009-08-05
Seriously, who is he kidding? He made a similar comment to an audience of Chinese university students in his spring trip to China and they laughed at him. The reality is that the Obama Government essentially quadrupled the spending deficit in it's first year from the deficit level in Bush's last term ($500 billion to $2 trillion, roughly).
But I would love to see the real spending numbers, and thus the real deficit, because multi-billion spending programs like the war on terror and the Government takeover of Fannie Mae and Fred
Construction loans are structured with upfront reserves — meaning that it takes much longer for CRE defaults to occur. Low short-term interest rates also means reserves can last longer — BUT, as DB notes, Once reserves are exhausted, defaults will skyrocket.
• By far the riskiest type of loan product in bank portfolios;
• Substantial portion represents loans to homebuilders;
• Market currently penalizing properties with vacancy issues extremely severely;
• Newly constructed (or only partially constructed) properties are the poster children for vacancy problems in CRE;
• Values of most newly constructed properties are down massively;
• Expect extremely high default rates and extremely high loss severity rates, both likely to be in excess of 50%;
• Total expected losses of 25% or more.
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