Posted on 07/25/2008 7:39:47 PM PDT by rabscuttle385
By John Poirier
WASHINGTON (Reuters) - U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.
ADVERTISEMENT Two weeks after the Federal Deposit Insurance Corp seized IndyMac Bancorp Inc (Other OTC:IDMC.PK - News), the Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.
First National had total assets of $3.4 billion and $3 billion in deposits while First Heritage had assets of $254 million and $233 million in deposits, regulators said.
The FDIC said the cost of the transactions to its insurance reserve is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of the $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.
(Excerpt) Read more at biz.yahoo.com ...
That is the worry. The US dollar is going to be toast, who would want it?
Here is an interesting read, old but still relevant.
http://www.freerepublic.com/focus/news/2051250/posts?page=1
I’m guessing Bank Of America. After all, not only did they buy out Countrywide, but they also were at the forefront of providing banking services to undocumented ‘workers’. Since the illegals are leaving in droves
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If I bought a new Chevy truck at a cost of $30K with a “matricula” card as ID through BofA and had no work I’d for sure be driving it back to Mexico where even the police drive stolen American cars.
Is that “Mutual of Omaha” the Insurance company as the new owner? It seems everyone has a bank, today... Even Charles Schwab!!!
Everybody owns at least one bank because Chris Dodd worked to rescind the Glass-Steagal act. One of the best safeguards since the “Bank Holiday” of the FDR era!!!
Yes. It seems everyone has a bank, today... Even Charles Schwab!!!
Only Walmart was forbidden to create its own bank.
Yup. Mutual of Omaha Bank is owned by Mutual of Omaha, the insurance company.
If the FedGov wanted to deregulate banks, besides lifting the prohibition on universal banking (investment bank and commercial bank marriages) they should have also lifted FDIC "insurance" for commercial bank deposits, or, alternatively, separated FDIC from the FedGov balance sheet. (Note that Glass-Steagall was defanged in two phases: DIDMCA in 1980 and Gramm-Leach-Blilely in 1999. Yes, that's Phil Gramm of McCain fame.) FDIC is just a psychological mind trick because the deposit insurance claims are ultimately a liability of the FedGov and, by extension, the U.S. taxpayer.
The only problem there is that dramatically altering FDIC "insurance" could have sparked a bank run. (Ultimately, if FDIC ever fails outright and the FedGov's and FedReserve's balance sheets become so thoroughly polluted by garbage, there could be a run on the dollar, but that's a different story.) The fact that the idiots in Congress (Dodd, Schumer, and Barney Frank included) started playing politically correct games of forcing banks to lend to everyone, including unqualified borrowers, didn't really help. Add effectively unregulated pools of capital (hedge funds) and very opaque novelty financial instruments (derivatives) to the mix and you get a ticking time bomb.
As a side note, Glass-Steagall did NOT prohibit commercial banks from engaging in dealing of municipal securities. So, even without Gramm-Leach-Bliley, if this mortgage brouhaha had hit the fan and hurt municipalities' abilities to levy property taxes, the pain could still have been felt on commercial banks' balance sheets.
Good question.
Anyone with brains would borrow in U.S. dollars and invest in productive assets (intangibles like an education with good earning power and tangible PPE like a house and car). Hell, at the right interest rates, even short-term operating credit (credit cards) can make sense.
The U.S. dollar has lost an incredible amount of value over the past few years. Correct me if I'm wrong, but almost anything with an after-tax 10 percent rate was just treading water, so to speak.
There is a run on at WAMU too
Horrendous deflation, or hyperinflation, or both?
NO cheers, unfortunately.
BofA isnt going under...good grief.
Bump! I heard about it too. "Unsecured creditors" (institutions with large accounts?) have been pulling their money out of WaMu.
**First National Bank of Nevada and First Heritage Bank NA of California.**
Hey, Harry Reid, did you have money in either of those banks? LOL!
How about you Pelosi? Is the First Heritage Bank of CA your bank? LOL!
Double whammy.
WAMU was crowing about having 50 billion in reserves lined up a couple weeks ago.....I think they had to borrow 10 billion fron the Feds Thursday.
Bank of America cannot go under because they will be the only bank to honor the State of California IOUs starting August 1.
The Nevada bank is in the Las Vegas and Reno areas, and the California bank is down in Los Angeles (same area as IndyMac). We can only hope that Harry Reid was somehow entangled in this mess. Pelosi hangs out in SF, so I don't think she's involved.
That was me! ;)
Garden variety bank failures themselves are survivable, unless a couple of the big boys in NYC and Charlotte fall out of bed at the same time. What's REALLY scary is that, inevitably, one of these bank failures is going to hit something stuffed full of derivatives, and that will get very ugly before it gets better.
I like to think of it this way: there are ten ticking landmines on an island surrounded by shark-infested waters. The problem: you don't know when they are going to explode, and you don't know which one is strapped to a nuclear weapon.
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