Posted on 01/23/2009 12:27:03 PM PST by Golddigger3
Banking regulators across the country are struggling with a new phenomenon: Banks are failing with accelerating speed, exposing holes in the regulatory infrastructure designed to catch collapsing institutions. . . .
Of the 25 banks that failed in 2008, nine toppled before regulators publicly cracked down, including IndyMac Bank and the banking operations of Wahington Mutual Inc., two of the biggest seizures in U.S. history. . . .
The problem illustrates a fundamental weakness in the country’s regulatory infrastructure. The government is positioned to help banks if there is erosion in their capital levels, referring to the cushion banks hold against unexpected losses.
But that isn’t what happened last year. Instead, many banks faced a liquidity crisis as customers and business partners lost faith, shutting off the banks’ access to short-term cash. [Have we already had runs on various banks?]
“In 2008, we have seen institutions fail with greater velocity than in prior years,” says Scott Polakoff, senior deputy director at the Office of Thrift Supervision. “That greater velocity is driven by liquidity crises, not capital crises.” . . .
“For the most part, I think it was a tidal wave,” says Rob Braswell, the top bank regulator in Georgia, where five banks failed last year. Only one was under a public enforcement action at the time. [If last year was a tidal wave, what will this year be since the loses are now seen as much, much greater]. . .
Liquidity kills banks faster than anything, and regulators just don’t have time to issue cease-and-desist orders and take formal enforcement actions,” says Jaret Seiberg, a Washington analyst at Stanford Group, a financial-services company. “We’ve seen banks die within a matter of days and weeks, You go from having a cold to buried.”
(Excerpt) Read more at online.wsj.com ...
LOL!
1) Will people have uninterrupted access to their money?
2) Can the Fed just wire any bank instaneous money?
3) What about credit cards?
I'm dying out here because I'm laughing so loud. Cannot stand this anymore. Where all the dirty, obnoxious, Wall Street brick throwers now ________________ ?
Please check my freeper page for more enlightening info. Or click here to learn other stuff. If you are so inclined. Otherwise, just go back to sleep . . .
There’s a story on FR that says that Capital One, the credit card giant, is seeing defaults from people who have “stunningly high” credit scores.
Credit unions aren't any safer. They depend on other banks to "interact" with the Federal Reserve banks.
How do you think that a credit union gets the armored car to roll up with cash? They're not member banks of the Federal Reserve.
Be careful, all credit unions are dependent on other banks.
Gold presently right around $900.
OMG.
He should have his tongue cut out and mounted.
He could keep it in the bottom drawer of his desk.
Whenever he openned the drawer he could see and read the inscription, "WA TAN ASS IAM"
I’m not worried, Obamamagic will save us!
Lee Iaccocca?
You'd be better off investing in Colt, Ruger, S&W, Glock, et al. In a year or two, what you have in your Bank of Serta won't be worth enough to buy new sheets for your bank.
Yeah, with my timing and luck, it'll drop to $300 the day after I buy.
I live here in Clark County, WA, and yes there was indeed a run on the Bank of Clark County. Reportedly, $28.3 Million was withdrawn over the three days prior to the FDIC arriving to seize the bank on Friday the 16th.
I can believe that these banks can go under faster than any Federal of State agency can react, especially if word leaks out that all hell is about to break loose...
Oh, I’ve been “investing in those “commodities” for years,and actually sped up the purchases a couple of years ago...
What if . . .
What happens if a bunch of banks go insolvent in the course of a couple of days; this becomes widespread knowledge and people withdraw billions from other banks; and then a bunch more become insolvent and so on?
maybe the market is saturated with too many banks? Maybe they should die off.
If high inflation hits.. you’d be better off spending money than saving it. It would be worth less and less each day.
That is a patently ridiculous statement that you can in no way defend. I personally know of at least one case where sound judgment and the ability to understand the mortgage business and the secondary markets have resulted in leveraged negotiations that saved at least one company many times over his annual salary.
The purpose of a good executive compensation package is to align executive interest with shareholder interest. However, once compensation passes a certain point this alignment is no longer effective. Indeed, it is counterproductive since it focuses executive energy on short-term goals (this year's mega-bonus) rather than long-term business success.
Aside from pure greed/ego, what real incentive does a CEO have to look out for the best interest of a company and its employees/shareholders if he knows that no matter what happens to the company this year's bonus gives him set-for-life financial independence?
Nobody should be surprised that these lotto-sized payoffs lead to reckless disregard for anything beyond the big payday.
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