US watchdogs want bar raised in failed bank reviews [FDIC overwhelmed by failures]

Reuters ^ | 2009-05-04 | Kevin Drawbaugh

[rabscuttle385]

WASHINGTON, May 4 (Reuters) - So many U.S. banks are failing that three government bank watchdogs want the law changed to force a review only when a bank failure costs the federal insurance fund $300 million or more. The inspectors general, or IGs, of the U.S. Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp., citing a heavy workload of "material loss reviews" of failed banks, want Congress to change the law that triggers a review, according to a letter obtained by Reuters on Monday.

Currently a review must be done if a federally supervised bank's failure costs the federal Deposit Insurance Fund more than $25 million, the letter said.

If the workload is not reduced, the watchdogs' oversight of other, urgent government programs to stabilize the financial system and revive the economy could suffer, said the letter, which was sent to Representative Barney Frank, chairman of the House Financial Services Committee. The request is expected to be discussed on Tuesday at a hearing before the oversight subcommittee of the U.S. House of Representatives Financial Services Committee.

In the first four months of 2009, 32 U.S. banks failed, compared with 25 in all of 2008, and just three in 2007. There were no bank failures in 2006 and 2005.

On Friday, in the biggest bank failure of the year so far, regulators shut down Silverton Bank, in Atlanta, Georgia, at a cost to the FDIC's bank deposit insurance fund of $1.3 billion.

In a material loss review, an inspector general explores why a failed bank's problems resulted in a hit to the federal bank insurance fund, and recommends how to prevent such a loss in the future.

[rabscuttle385]

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[Crim]

These are not the looted banks you are looking for.....move along...

[Pelham]

the Bank Implode-O-Meter, now tallying 95:

http://bankimplode.com/

[Gritty]

Yeah. No sense doing reviews on anything losing $25 million or less. That's just chicken feed compared to the looting going on elsewhere.

Who cares when we are throwing away money in the trillions?

[pointsal]

Say... For $25-million, I sure would like to get one of those chickens in my yard.

[GOPJ]

Thanks for the ping.