Seven U.S. banks closed by regulators; failures at 140 (FDIC Friday) (Obamanomics alert)

Dow Jones / Market Watch ^ | 2009-12-19 | John Letzing

[rabscuttle385]

SAN FRANCISCO (MarketWatch) -- Seven U.S. banks were closed by regulators on Friday, bring the total this year to 140 as the effects of the credit crisis continued to be felt across the country.

What's more, the Federal Deposit Insurance Corp. established temporary institutions to help close two of the failed banks.

[rabscuttle385]

Failed Bank Information for First Federal Bank of California, F.S.B., Santa Monica, Calif.

Failed Bank Information for Imperial Capital Bank, La Jolla, Calif.

Failed Bank Information for Independent Bankers' Bank, Springfield, Ill.

Failed Bank Information for New South Federal Savings Bank, Irondale, Ala.

Failed Bank Information for Citizens State Bank, New Baltimore, Mich.

Failed Bank Information for Peoples First Community Bank, Panama City, Fl.

Failed Bank Information for RockBridge Commercial Bank, Atlanta, Ga.

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FDIC Failed Bank List

[rabscuttle385]

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[Starboard]

MSM very quiet on this one. Now...if a Republican was president, it would be above the fold, bold letters or lead story on nightly news.

[FromLori]

Couldn’t even find a buyer for this one have to pay out directly...

The Federal Deposit Insurance Corp. said it has approved a payout of insured deposits at RockBridge Commercial Bank, which was closed by Georgia bank officials on Friday.

The FDIC estimates the Atlanta, Ga. bank’s failure will cost the federal deposit insurance fund about $124.2 million.

Bank closings aren’t rare—RockBridge was the 134th federally insured bank to close this year—but the payout to depositors is unusual.

In RockBridge’s case, the FDIC said it wasn’t able to find another financial institution to take over the failed bank’s operations. As a result, it said checks to retail customers for the amount of their insured deposits will be mailed on Monday.

Brokered deposits will be wired once brokers provide the FDIC with the necessary documents to determine if any of their clients exceeded the insurance limits. The FDIC said customers who placed money with brokers should contact the brokers directly for more information about the status of their funds.

As of Sept. 30, RockBridge Commercial Bank had about $294 million in total assets and $291.7 million in total deposits. At its closing, the bank had an estimated $2.1 million in uninsured funds, an amount the FDIC said is likely to change once it obtains additional information from these customers.

The FDIC will offer a toll-free telephone hotline for bank customers with questions, at 1-800-405-1604, with service until 9 p.m. Eastern time on Friday, from 9 a.m. to 6 p.m. Eastern on Saturday and on Sunday from noon until 6 p.m. Eastern.

http://online.wsj.com/article/SB126119778559798417.html

Banks in six U.S. states were closed Friday, bringing the total number of failed banks this year to 140, at a cost of over $1 billion to the Federal Deposit Insurance Corporation.

Among the institutions seized by regulators was a so-called “bankers’ bank” in Illinois called Independent Bankers’ Bank (IBB), which had about 450 client banks in four U.S. states.

http://money.cnn.com/2009/12/18/news/economy/bank_failure/index.htm?eref=rss_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+rss/cnn_topstories+(RSS:+Top+Stories)

[KarlInOhio]

How do they decide whether to close a bank or bail it out? By the number of Congressmen and Treasury officials they have on the payroll. Goldman Sachs, Citibank and the rest had quite a few so the trucks of cash drive from the Treasury and Federal Reserve to the bank vaults. Podunk Savings and Loan could only afford to rent town councilmen, so they get swept away.

[AceMineral]

Things are getting thinner here in Podunk.

[An Old Man]

Now ya got my attention!

Among the institutions seized by regulators was a so-called “bankers’ bank” in Illinois called Independent Bankers’ Bank (IBB), which had about 450 client banks in four U.S. states.

What does this mean?

Do these "Client Banks" have some kind of insurance program that exceeds the FDIC limits?

Does the FDIC insure depositors when the cash deposited in a "Client Bank" is then re-deposited in a "Bankers Bank"?

[GOPJ]

MSM very quiet on this one. Now...if a Republican was president, it would be above the fold, bold letters or lead story on nightly news.

You're right... that's how it would be if a Republican was in office. When a dem's in office all bad economic news is - : - not covered - not covered "much" or labeled "unexpected".

[Starboard]

You’re right. ‘Unexpected’ is a word whose use has come into vogue in the MSM. A sublte way of implying that the number is somehow an anomoly or departure from the norm.

[javachip]

The TARP Capital Purchase Plan, core of the bailout, had criteria for banks to participate, i.e. they had to be relatively healthy before Treasury bought the preferred stock. There were obviously some exCeptions, but speCifiCs on whiCh banks had other Criteria aren’t publiC information.

FDIC’s decision to close a bank doesn’t factor whether or not its in TARP - at least it isn’t supposed to.

So far, it does appear that Treasury’s TARP screening did pick somewhat healthier banks. Of the 140 failures of FDIC insured institutions, only two were TARP banks. CIT, which declared bankruptcy, was in the Cap Purchase Program, but it wasn’t an FDIC insured bank.

With about 8000 FDIC insured banks in the country, the failure rate for those is a little over 1.5%. Over 600 institutions are/were in the Cap Purch. Plan giving a failure rate of less than 0.5%.

I read a WSJ piece on AmTrust’s failure earlier this year. AmTrust reportedly tried to get TARP money but was denied because it wasn’t considered healthy enough.

I don’t know if Treasury’s criteria for TARP participation is public information. I’d be surprised if it was.

[javachip]

When a dem's in office all bad economic news is - : - not covered - not covered "much" or labeled "unexpected" or deemed to be George Bush's fault.

You missed one :)

[GOPJ]

You’re right - good catch.

[GOPJ]

One TARP criteria was partially based on how much capital a bank had?

[javachip]

Reports were the first eight banks, the big ones, weren’t given a choice, they were told to participate or else. The reason given was Treasury didn’t want taking TARP to be seen as a sign of weakness.

Beyond the big guys, the banks applied to Treasury and were accepted or rejected. I’m sure capital ratios would have been a primary consideration, but I don’t know exactly how Treasury decided who qualified for TARP and who didn’t. As far as I know, information that an applicant had been rejected was not made public by Treasury.

[GOPJ]

Interesting - thanks for sharing.