"Your deposits are secure....on Monday we start feeding the house flippers to packs of East African wild hyenas on the Savana."
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 ...
Note the FDIC only has approx. $53 Billion to back almost $4-5 Trillion in deposits, and Chuck Schumer's IndyMac charlie foxtrot already cost $4-8 Billion.
This new event adds almost three quarters of a billion.
Okay, two more down. Getting to be a Friday night tradition.
Makes me wonder if my bank goes under, will there BE any money left for the FDIC to bail out the depositors.
My guess, somewhere along the way, the answer will be NO, because they WILL run out of money. There just isn’t enough to cover all those “not marked to market” credit swaps the banks are holding.
When the FDIC exhausts its own funds, any other claims are put to the U.S. Government and become an obligation of the FedGov.
Is anybody wondering about Bank of America? They bought out Countrywide, Lasalle Mortgage and is on the hock for billions of off the books guarantees to companies that invest in mortgages...
TBTF. WaMu, on the other hand...
Eventually, one of the bank failures will hit something stuffed full of derivatives, and then the real sh*tstorm will begin.
The govt would like you to believe that but in reality the obligation goes to the taxpayers.
FYI, two more banks bit the dust after market closing.
The Feds can't bail out EVERYBODY... can they?
They own and operate the printing presses. Of course, history teaches us what happens when governments exercise the Zimbabwe maneuver.
“TBTF”
Type in english when I went to school 60 years ago they didn’t teach alphabet soup!
TBTF = "Too Big to Fail"
Kick all the white people off their farms?
I was referring to the fact that Mugabe's government started printing paper money like crazy.
Thank you Libtards!!
“A billion here, a billion there, and pretty soon you’re talking real money.”
Everett Dirksen fan club.
I know you were... just pulling your leg there... :)
Ping.
Bank and S&L shutdowns are always performed of Fridays. Gives the regulators two days to get things in order for re-opening on Monday under new management.
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
*****************************************************
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.
"Your deposits are secure....on Monday we start feeding the house flippers to packs of East African wild hyenas on the Savana."
You're right. According to FT, WaMu got $10 Billion from the Fed discount window, plus the FHLB system, and "open market operations."
WAMU was crowing about having 50 billion in reserves lined up a couple weeks ago.
They can crow all they want, but if the market doesn't believe them and the equity prices get driven to zero, or something or someone (like Chuck Schumer) does something stupid and sparks a bank run on WaMu, it's game over.
It comes down to whether folks believe that WaMu's "assets" are priced accurately.
Then there's that issue with TPG (hedge fund?) in Dallas that tied WaMu's hands if it needs to raise more equity or if the equity price goes to certain levels.
I am not an expert on holding companies, but this looks like just one bank failure to me, sloppy reporting by Reuters again.
Here is the 2007 Annual Report of 1st National Bank of Nevada, who has a division in SoCal called First Heritage Bank...makes for interesting reading!!
http://www.fnbnonlinehb.com/pdfs/annualreport.pdf
I peeked at their annual report too. The ratio of equity to assets for the holding company was just over 5 percent, which is dangerously low. Probably, the holding company got walloped by losses (look at the listing of bank-owned properties on one of their sites) and the OCC swooped in to shut the whole thing down. Per FDIC reports, deposits were transferred to Mutual of Omaha Bank, but loans were retained by the FDIC while they sort through the rubble.
OK...thanks for the info., and my apologies to Reuters! ;-)
B of A is still paying dividends, so with the current lower Stock price, the yield is about 13%. Capitalization is not a problem for them.
My Wife just retired last month, and has Roth IRAs, and other financial investments. I've talked to her about pulling the Roth out and going all cash as you have. Found out she will have to pay a ten percent penalty, and possibly pay a percentage to the IRS as well, as she retired on disability and is five years younger than the minimum.
Do any of you have any wisdom to throw her way as to what the best road is to save on penalties in converting her assets?
I'm going to talk to my CPA next week about it, but I would love to have some ideas for her to kick around until then from You guys!
JD
Derivatives should be called RUBINS FOLLY.
while more banks may fail, the US Dollar is on the rise again.
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