Banks die too fast for regulators (BANK RUNS???)

Wall Street Journal ^ | 1/23/09 | Staff

[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.”

[RobRoy]

>>The problem is that the notional value of the worthless assets of any given one of todays institutional failures is equal to the entire value of failures of the S&L crisis...<<

And, this isn’t done yet.

[familyop]

Here’s another one for the truth about conditions in Argentina (also in the UK then here soon). [The government there and Euro-corporations are lying about it through their propaganda outlets.] You’ll find a lot of real survival info for a depression on that page. Don’t miss the mention of Benetton and the important point about that (one important and disastrous effect of globalism).

Lessons from Argentina’s economic collapse
http://www.powerswitch.org.uk/portal/index.php?option=com_content&task=view&id=2079&Itemid=2

[familyop]

Here’s another welcome consequence of the trade imbalance regime that is now in decline. ...labor pool shrinkage in progress.

Unhappy couples staying together as economy makes divorcing too costly
http://www.freerepublic.com/focus/f-news/2137481/posts

And I hope oil goes over $200 soon.

[Diana in Wisconsin]

“Wall Street is losing faith in Washington's efforts to fix the financial crisis. As bank losses pile up and bank stocks plunge, investors have an urgent question for the new Obama administration: What's the plan?”

-- Associated Press, January 21, 2009

Um...I'm pretty sure that since we now have a bunch of SOCIALISTS in charge of the Piggy Bank, they're waiting for things to tank, then will swoop in and 'Nationalize' everything they can.

Hold on to your butts! If you haven't pulled your cash out of stocks and put it into bonds or gold by now, you're pretty much screwed.

[RSmithOpt]

Though what you say is the truth, however cooked books and honest margin from doing solid business is what their salaries and bonuses should have based on 2 qtrs down the road to allow for 'adjustments'.

Booked profits from Ponzi scheme derivatives based upon borrowed monies built upon AA+ rated sub-prime repackaged loans was ludicrous. Them again, the fat cats got fatter at the expense everyone else's ignorance and trust.

I reckon I am the dumb one.

I have never ever seen such a massive conspiracy ever implemented and pulled off in the history of mankind. Now the grandchildren get to live like Mexicans when they become adults if they don't starve to death first.

[Travis McGee]

“The first rule of bank runs: get there first!”

[Travis McGee]

I see articles lauding the GLD ETF for always keeping almost 100% of the gold represented by the stock. Why do you doubt them?

HISTORY!

[Jet Jaguar]

NY Senator Schumer caused the IndyMac run.

[Jet Jaguar]

well put!

[EnglishOnly]

I’m tired of all these A-holes in Congress.

The don’t know Sh-t from Shino-a and I for one am fricken sick of giving my tax dollars to these NUMSKULLS to give away to a bunch of Fricken CROOKS in the Wall Street Financials!

[GOPJ]

Oh yeah, expect it to get much worse... and not a peep of these collapses from the Government...

Now that Bush is out, the MSM doesn't seem to care about the economy... not much from them either.

[lainie]

Interesting bank runs, just not the line-out-the-door type. You don’t have to actually go to the bank to pull your money anymore.

[Chickensoup]

Have credit unions been caught in this problem?

[PAR35]

I think the answer to your question is ‘Yes’ followed by either the qualifier of ‘not as badly’ or ‘not as badly yet’.

“January 8, 2008, Alexandria, Va. – Chairman Michael E. Fryzel announced today activation of the National Credit Union Administration (NCUA) National Examination Team (NET) to enhance the supervisory process in areas where economic conditions have adversely impacted federally insured credit unions.”
http://www.ncua.gov/news/press_releases/2009/MA09-0108.htm

So it looks like there is some concern by their insurer.

I only found 1 failure so far for 2009. FDIC is at 3 for the year.

Valley Credit Union Put into Receivership; Citizens Equity First Credit Union Purchases and Assumes Assets
http://www.ncua.gov/news/press_releases/2009/MR09-0102.htm

[Jack Black]

If you lose your job the first thing most people are going to do is default on unsecured debt. Why jeapordize your house when you can keep up the payments on it while letting the CC's go hanging?

Won't the credit card company eventually come after you for the house? Force sale, liens, etc.

[PAR35]

On the other hand (from my prior answer), where do you think the bank regulators do their banking:

https://www.fdicfcu.org/home/home

[dalereed]

“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.”

Washington Mutual didn’t fail, it fell below depository requirement becasue of media articles that caused a run on it by depositors that pulled 18 billion of deposits out in 2 weeks.

[dalereed]

“Why jeapordize your house when you can keep up the payments on it while letting the CC’s go hanging?”

You’re a crook!!!

[Axenolith]

CC debt is unsecured and most, if not all, states have exemptions for homes in any lien sense. You probably wouldn’t lose your car either, even if paid for, as it insures your ability to work.

Now, if the card has a direct purchase statement for you putting 25 ounces of gold on it... Then again, that’s what cash advances are for ;-)

And at this point, I wouldn’t begrudge ANYONE for doing that either. The money center banks and institutions have essentially put a knife in the guts of this country, destroying home equity they helped build to fantasy levels, wiping out the true hard earned wealth of 401Ks and IRAs and then subsequently destroying the nations money system and finances with crony bailouts.

[Axenolith]

Oh bullshit. I pay mine, what little outstanding I have, on time.

But when you come up short and have to make the decision between your plastic or your home, you make sure you keep that reply in mind!