Why are all of the bank failures a non-issue?

Discussion in 'Economics' started by DrPepper, Apr 23, 2010.

  1. Every Friday evening, I see this same story on Yahoo:


    According to the article:

    "There were 140 bank failures in the U.S. last year, the highest annual tally since 1992 at the height of the savings and loan crisis. They cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008 and only three succumbed in 2007.

    The number of bank failures likely will peak this year and will be slightly higher than in 2009, FDIC Chairman Sheila Bair said recently.

    As losses have mounted on loans made for commercial property and development, the growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

    The number of banks on the FDIC's confidential "problem" list jumped to 702 in the fourth quarter from 552 three months earlier, even as the industry squeezed out a small profit. Still, nearly one in every three banks reported a net loss for the latest quarter.

    The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years."

    The number of bank failures is increasing every year, yet this fact gets hidden every week in the weekend news and rarely if ever is reported on the evening news. The Fed said that the number of failures will likely peak this year and everyone just accepts that statement as fact. With the potential for a worsening commercial real estate crisis, I could easily see a continued increase in the number of failing banks into next year.

    With more banks failing, the national debt continuing to grow exponentially, unemployment remaining high, etc.-- it simply amazes me that so many people think that our economy has recovered from the economic crisis. The real crisis is yet to come and will present amazing profit opportunities for those who are ready.
  2. I agree that the banks failures are not reported on page 1.
    What's surprising to me are the Gold ads that state "The US Dollar is failing, the Economy is failing, and our banks are failing!".
    Companies can pay for TV air time and say stuff like that, legally?
  3. dr pepper you're correct and its just another fact in the line of 100's of facts from greece to abu dabia that the mkt ignored. one day it will care but timing the fall to profit is very tough
  4. schizo


    This Kafka-esque farce of slyly dropping the foreclosure news on Friday night hoping that nobody would notice is a real classic. Why, were these banks too small to give a damn for anyone to care about?

    What I don't understand is how come these small banks didn't line up at the Fed window to replenish their reserves at 0%, which they could have used like their fatass Wall Street brethren to buy T-notes at 3%? Perhaps because they were not invited by Bernanke & Co.?
  5. No offense...but, get a fucking clue!!!! The "bank failures" are TOTALLY FUCKING ARTIFICIAL!!! Look at the intersection of "geography" and "finances"" of the failures!!!!!!!!! NO - DO NOT JUST GO AND READ THAT STATEMENT - GO AND LOOK AT GEOGRAPHY AND WHERE THE "BANK FAILURES" HAVE OCCURRED!!!!

    Take for instance this weeks' bank failures - OH MY GOD - WHO WOULD HAVE FUCKING THOUGHT!!!! ALL OF THIS WEEKS' FAILURES OCCURRED IN ILLINOIS!!!! OMG!!!! You don't think that had to do with the press being able to go out and say, "Well, rightfully Obama can say that the poor regulation of banks is affecting Obama's home state of Illinois - just look at the latest bank failures!!! Illinois has suffered horribly!!!" Get a FUCKING CLUE!!!! Look at the number of bank "failures" in the northeast and in particular New England - WHAT A FUCKING SHOCK!!!!! THOSE FUCKING BANKERS MUST BE FUCKING GENIUSES IN NEW ENGLAND - JUST ONE BANK FAILURE...THOUGH THE FDIC SAYS HUNDREDS OF BANKS IN TROUBLE THROUGHOUT THE COUNTRY - ALL BUT ONE OF THE OVER 200 SINCE 2009 HAVE BEEN OUTSIDE OF NEW ENGLAND???? WHY???? If banks start to fail in New England - Democrats will have their base eroded and the Dems will lose hold of one of their bastions. Don't just read that statement!!!! Understand this: It is not just the Dems who have "whored" for the banks of New England - it is the Republicans as well! Why? Because we don't have a real democracy! We have a system where the rich and the powerful corporations PAY for the policy that they want - voters be DAMNED!!!! Dems and Reps have the same MASTERS!!!! That is some "elite power group" - who totally fucking dominate politics in the US. The Bilderbergers "selected" Obama over Hillary for US president in 2008! They also chose that Ron Paul would not be the Republican candidate - ihttp://www.youtube.com/watch?v=rHHQKo5EshU Look at Hillary - winning in the polls...up until the Bilderberg meeting in Chantilly, Virginia...then the miracle boy "O" wins the Dem primaries!!! Get a clue!!!

  6. achilles28


    Somebody gets it. Picking winners and losers.
  7. S2007S


    There could be 5 a week for the next 75 years and the market would push this news aside, the markets don't care about much anymore, they push higher on a daily basis ignoring anything negative. The reason why the markets don't care is because the biggest credit crisis in history came and went in a few days, they used the taxpayers to bailout the fucking worthless bankrupt industries like auto, housing and banking to keep everything from completely falling apart. So now the market views a few banks going under on a weekly basis as a pure positive. The system is being entirely propped up, I'm sure it can go on for another 5-10 years with bubbles inflating to make it look like the economy is coming back, but in reality it will be nothing but another liquidity driven cheap credit economy with even more problems.
  8. It doesn't matter, because:
    a) it's priced in;
    b) de-financialization of the US economy is welcome, especially if it occurs through the failure of speculators (which the majority of these banks were).
    c) generally, failure of risky businesses is a natural part of capitalism.

    Finally, small banks are able to and do access the Fed window (and it's not 0%, but rather 75bps). However, the Fed doesn't just give you money. You need to post collateral, which these failing banks don't have.
  9. schizo


    So I thought 16 months ago. But why? AIG, the riskiest enterprise in history, was saved for the exclusive benefit of it's counterparty, Goldman Sachs.

    So I thought 16 months ago. But why? AIG, the riskiest enterprise in history, was saved for the exclusive benefit of it's counterparty, Goldman Sachs.

    Here's my anal conclusion: You can't damn cherry pick who you want to save!
  10. You brainiacs should look at the actual bank failure press releases and be sure to look up and understand the term "loss-share".

    The street will be UNABLE to ignore much longer.

    My favorite THIS week is the small and innocuous New Century Bank (deposits assumed and all assets purchased by MB Financial Bank)

    Assets: 485.6 Million
    Deposits: 492.0 Million (not a typo, more deposits than assets)
    Loss-Share between MB and FDIC on 429.1 million of assets (that's 88% of the assets!)

    WTF does that tell ya about asset quality and valuation? Just a matter of time before we the people have the privilege of bailing out the FDIC, and the acquirer gets (partially) bailed out via the loss-share. This has been going on for weeks, but loss-share percentages have just recently exploded into the land of (troy)Oz. 88% is just shy of being owned (and therefore valuation guaranteed) outright by the FDIC!

    Every one of the failures this week have loss-share arrangements. Nearly every one of the bank failures this year have loss-share arrangements.

    FDIC press releases: http://fdic.gov/news/news/press/2010/index.html
    #10     Apr 24, 2010