Posted on 08/16/2009 12:23:08 PM PDT by lainie
More than 150 publicly traded U.S. lenders own nonperforming loans that equal 5 percent or more of their holdings, a level that former regulators say can wipe out a bank’s equity and threaten its survival.
The number of banks exceeding the threshold more than doubled in the year through June, according to data compiled by Bloomberg, as real estate and credit-card defaults surged. Almost 300 reported 3 percent or more of their loans were nonperforming, a term for commercial and consumer debt that has stopped collecting interest or will no longer be paid in full.
...
At a 3 percent level, I’d be concerned that there’s some underlying issue, and if they’re at 5 percent, chances are regulators have them classified as being in unsafe and unsound condition,” said Walter Mix, former commissioner of the California Department of Financial Institutions, and now a managing director of consulting firm LECG in Los Angeles. He wasn’t commenting on any specific banks.
Missed payments by consumers, builders and small businesses pushed 72 lenders into failure this year, the most since 1992. More collapses may lie ahead as the recession causes increased defaults and swells the confidential U.S. list of “problem banks,” which stood at 305 in the first quarter.
...
Chicago- based Corus Bankshares Inc., Austin-based Guaranty Financial Group Inc. and Colonial BancGroup Inc. in Montgomery, Alabama, each with ratios of at least 6.5 percent, said in the past month that they expect to be shut.
“This is a fairly widespread issue for the larger community banks and some regional banks across the country,” said Mix of LECG, where William Isaac, former head of the Federal Deposit Insurance Corp., is chairman of the global financial services unit.
(Excerpt) Read more at tehrantimes.com ...
Ok, who doesn’t understand when massive amounts of homes go into foreclosure, banks go under.
Amazing to think that the Tehran Times covers this story more accurately and honestly than CNBC.
geee. thought we settled that with first trillion.
I know. Just keeping up with which banks are next up on the block. The mortgage holding banks can’t write the bad loans off without collapsing — but they also can’t sell the homes (for a song) for the same reason. Our agent tells us it might be a good time for those of us not underwater to consider going onto the market, believe it or not. The foreclosed home market is frozen (around here).
IKR... but it has nothing to do with coming up with the money - that’s easy because they’ll just print it. The problem is what it does to the banks’ balance sheets.
Which is why they want the government, via TARP, PPIP, etc. to pay way more than (current) market value for them. Get them off the banks’ balance sheets and onto the government’s, where they can lose trillions a year and nobody seems to care.
Somebody correct me if I’m wrong here
I think thats right...why dont they just have a lottery
reality realty bump
Same here, no money to lend for foreclosed homes. No one trusts the market anymore.
I thought it was better than expected. MSNBC has reported that the recession is over and Obamanomics is leading to HAPPY DAYS!
I don’t think it’s all downhill or uphill. I believe we’ll be riding flat terrain for a while. But personally, I don’t think anyone can predict the future.
Colonial was shut down Friday.
Turbo Tax Timmy, Helicopter Ben, the Kenyan...
How'm I doin' so far, coach?
Just wait until all the loan payments start coming due on all those car notes that go along with the cash for clunkers “deals”.
I would imagine that a good number of those who traded their otherwise perfectly good and PAID FOR cars and who were already living on the edge of financial trouble, now will have a rude awakening with their new insurance bill, car payment book, and the real world...
Only that it will be cold, dark and brutish.
That’s basically it. The government is supposed to be able to take the hit much better than the private sector can. Whether or not that’s true is a big question mark.
If my brother's ancedotal evidence is typical (he runs a car dealership), you would be dead wrong. He said the typical C4C buyer was an older middle class white buyer paying CASH completely or with very limited financing.
Thanks for the ping.
You.
It’s the down side of fractional Banking. Banks loan out ten dollars for every dollar on deposit. If you lose fifty cents of that dollar in losses, coupled with operational expenses eating the other fifty, and you are losing money.
Now you have a reverse money machine, that sucks up money, and loses it. So now the Feds have to step in, tax other people, and keep these 150 dead, zombie banks afloat.
By the way, the owners and officers that profited in the good years can just walk away with what they can, and the rest of us pick up the tab of them making money in the good years, and dumping losses on us in the bad years( Nice business to be in, eh?) Now you know why every stucco street corner had a ‘bank’.
Sub prime banks, making sub prime loans to what is fast becoming a sub prime economy with a Federal Reserve and Republicans and Democrats all in one big taxpayer rape gang.
That’s been my observation.
I’ve also seen working stiff say they would of liked to have one of the clunkers. The day to day working stiff is the most abused part of the economy.
Too much to be on welfare, fighting off illegals cutting pay, and invisible to Democrats and Republicans and unorganized. I. e, the sheeple.
I’m sure you’re correct based on what I’ve seen.
C4C is primarily a program to keep Government Motors and Fiat USA going until Nov 2012. The fact that it benefits “the rich” and foreign car nameplates is the price the Baraqqis had to pay to get it through Congress.
LOL, so you can just laod up the banking system with loans that cannot be repaid and everything will be fine ... LOL.
Sounds like Barney Frank accounting.
Nam Vet
Yes.
That’s the system, by law, that we have.
Basically, private profits, public losses.
Posted by: Rolfe Winkler
A banking system loaded down with hundreds of billions of dollars worth of unrecognized bad debt — Japan in the 1990s? No, it’s the United States today.
And where are American banks hiding their losses? Among other places, in their loan portfolios.
Banks have written down billions in toxic securities, but many toxic loans are still carried at close to full value. According to data published by the Federal Reserve late last year, banks are carrying $3 trillion of residential real estate loans and $1.7 trillion of commercial real estate loans on their books for a total of $4.7 trillion. Dan Alpert at Westwood Capital thinks as much as a fifth of that total could be uncollectable.
[snip]
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