9 banks down, 5991 to go

Discussion in 'Economics' started by The Kin, Aug 22, 2008.

  1. WASHINGTON: Federal regulators on Friday shut down Columbian Bank and Trust Co. in Kansas, which was struggling with losses on soured real estate loans. It was the ninth failure this year of a federally insured bank.

    The Federal Deposit Insurance Corp. was appointed receiver of the bank, located in Topeka, Kansas. It had $752 million in assets and $622 million in deposits as of June 30.

    The FDIC did not give a reason for the closure, but Columbian reported $92 million in delinquent loans in the second quarter, citing a "volatile real estate market." The bank set aside $9.2 million for loan losses in the first quarter.

    Columbian has said that five borrowers represented nearly half the $92 million in problem loans. Many of its troubled loans were in construction and development.

    The FDIC said the bank's deposits will be assumed by Citizens Bank and Trust of Chillicothe, Missouri. Its nine offices will reopen Monday as branches of Citizens Bank.

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    Depositors of Columbian Bank will continue to have full access to their deposits, the agency said.

    The nine failures so far this year compare with three for all of 2007, and federal banking officials have said that more banks are in danger of collapse.

    The pressures of tighter credit, tumbling home prices and rising foreclosures have been battering many banks, large and small, across the nation.

    The FDIC estimated that the resolution of Columbian Bank will cost the deposit insurance fund around $60 million.

    Regular deposit accounts are insured up to $100,000, while retirement accounts have $250,000 insurance coverage.

    There were about $46 million in uninsured deposits held in 610 accounts at Columbian Bank that potentially exceeded the insurance limit, the FDIC said.

    The FDIC has been beefing up its staff of examiners to handle the anticipated spike in bank failures this year.

    The largest bank failure so far involved savings and loan IndyMac Bank, which was seized by regulators on July 11 with about $32 billion in assets and deposits of $19 billion.

    The seizure of Pasadena, California-based IndyMac, which was the largest regulated thrift to fail in the United States, prompted hundreds of angry customers to line up for hours in Southern California to demand their money.

    IndyMac also was the second-largest financial institution to close in U.S. history, after Continental Illinois National Bank in 1984.

    The FDIC has been operating the bank, now called IndyMac Federal Bank, under a conservatorship.

    Of the 8,500 or so banks in the country, 90 were considered to be in trouble in the first quarter. The FDIC doesn't disclose the banks' names.

  2. i thought Kansas was nearly immune to the mess
  3. Dry run for bigger stuff. Training excercise.
  4. Yup! They say Indymac wasn't even on the FDIC early warning list. :D

    It's only a matter of time before we go full speed ahead.

    BTW, Anyone check USAJOBS recently. There are hundreds of job listings for FDIC and OTS. I wonder what that could mean??
  5. oriol88


    good definition of prudence