Regulators shut down banks in Nevada and Washington on Friday, marking the 21st and 22nd failures this year of federally insured banks.

The Federal Deposit Insurance Corp. was appointed receiver of Carson River Community Bank, based in Carson City, Nev. and Rainier Pacific Bank in Tacoma, Wash.

Carson River Community Bank had $51.1 million in assets and $50 million in deposits as of Dec. 31. Rainier Pacific Bank had $717.8 million in assets and $446.2 million in deposits as of Dec. 31.

The FDIC said that Carson River’s deposits will be assumed by Reno, Nev.-based Heritage Bank of Nevada. Carson River’s lone branch will reopen Monday as an office of Heritage Bank.

Source/Full Story:   Yahoo! News

Stock markets in Dubai were down this morning as investors reacted nervously to the latest proposed solution to Dubai World’s $22 billion (£14 billion) debt crisis.

The city’s main index, the Dubai Financial Market fell 0.83 per cent in early trading as it emerged that the troubled state-owned conglomerate plans to offer its creditors just 60 per cent of their money back.

The exchange plunged 3.5 per cent yesterday when news of the proposal first leaked. Dubai World has been locked in talks with creditors for almost two months and bankers said yesterday that the two sides remain poles apart on the substantial issues of the negotiations.

The offer floated by Dubai World would see the group’s banks take a 40 per cent “haircut” on their investment in return for a sovereign guarantee that they will be repaid after seven years.

Source/Full Story: Times Online

We’ve been waiting on this one for a while now…

Over the next several years, failed commercial real estate loans could litter American cities with empty stores and office complexes, cause hundreds of bank failures and weaken the economy, a watchdog report says.

Banks face up to $300 billion in losses on loans made for commercial property and development, according to a report released Thursday by the Congressional Oversight Panel. The panel monitors the government’s efforts to stabilize the financial system.

The report says the defaults could lead to reduced lending and cause the eviction of families from rental properties. Bank failures also could contribute to job losses and hurt the economic recovery.

Smaller banks are more vulnerable to the losses than their larger Wall Street counterparts. That’s because commercial real estate makes up a larger portion of their portfolio.

Source/Full Story: Yahoo! News

It could take until November 2018 to get the full story behind the U.S. bailout of insurance giant American International Group (AIG.N) because of an action taken last year by the Securities and Exchange Commission.

In May, the SEC approved a request by AIG to keep secret an exhibit to a year-old regulatory filing that includes some of the details on the most controversial aspect of the AIG bailout: the funneling of tens of billions of dollars to big banks like Societe Generale, Goldman Sachs (GS.N), Deutsche Bank (DBKGn.DE) and Merrill Lynch.

The SEC’s Division of Corporation Finance, in granting AIG’s request for confidential treatment, said the “excluded information” will not be made public until Nov. 25, 2018, according to a copy of the agency’s May 22 order.

The SEC said the insurer had demonstrated the information in the exhibit, called Schedule A, “qualifies as confidential commercial or financial information.”

Source/Full Story:  Reuters

The federal government said Wednesday it will take a majority ownership stake in the troubled auto lender GMAC, providing another $3.8 billion in aid to the company, which has been unable to raise from private investors the money it needs to staunch its losses.

The new aid package for GMAC, coming as most large banks are repaying the government, underscores both the problems afflicting the company and its importance to the Obama administration’s efforts to revive the auto industry.

GMAC, which already has taken $12.5 billion in direct federal aid along with other forms of government support, is the largest lender to General Motors and Chrysler dealerships and to their auto-buying customers.

The Treasury Department said it will increase its stake in GMAC to 56 percent from 35 percent. It also will hold about $14 billion in what amount to loans that GMAC may eventually be required to repay. The government plans to appoint four of the company’s nine directors.

Source/Full Story: washingtonpost.com

State and federal banking regulators seized three small lenders on Friday, lifting the total number of bank failures this year to 133.

Source/Full Story: WSJ.com

Geithner, 48, took issue with that, saying that the entire financial system was at risk at the height of the crisis, including Wall Street’s big institutions.
…
“None of them would have survived” had the government stood aside and let the crisis run its course, he said. “The entire U.S. financial system and all the major firms in the country, and even small banks across the country, were at that moment at the middle of a classic run, a classic bank run.”

Source/Full Story: Bloomberg.com

Nine more U.S. banks, all owned by the same Illinois holding company, were closed Friday by regulators, and the Federal Deposit Insurance Corp. said U.S. Bank of Minneapolis would assume their deposits.

The closings brought the 2009 total to 115 in 2009 — the first year since 1992 that more than 100 banks have gone under.
…
The deposit insurance fund will take an estimated $2.5 billion hit, the FDIC said.

All nine banks were subsidiaries of FBOP Corp., a holding company based in the Chicago suburb of Oak Park, Ill., according to the FDIC.

Source/Full Story: MarketWatch

Reporting from Washington – Despite signs of economic improvement, banks continue to fail at a brisk pace, forcing regulators to scramble to keep the industry-financed deposit insurance fund from running out of cash.

With the fund technically falling into the red today, the Federal Deposit Insurance Corp. proposed Tuesday to require banks this year to prepay $45 billion, or more than three years’ worth, of insurance premiums.

The move would allow the FDIC to avoid drawing on a $500-billion line of credit the agency has with the Treasury Department.

“It’s clear that the American people would prefer to see an end to policies that look to the federal balance sheet as a remedy for every problem,” said FDIC chief Sheila C. Bair. “In choosing this path, it should be clear to the public that the industry will not simply tap the shoulder of the increasingly weary taxpayer.”

Insured bank deposits continue to be “100% safe,” Bair emphasized, and analysts agreed.

Kevin Petrasic, a former special counsel at the Office of Thrift Supervision, described the FDIC’s decision, which is open for public comment for 30 days, “as the least objectionable of some not particularly good options.”

Source/Full Story: latimes.com
Technorati Tags: FDIC

Banks round the world have still to reveal about half of their likely losses resulting from the financial and economic crisis, the International Monetary Fund said on Wednesday, warning that there was still a “significant” risk of another downward lurch in the global recession.

The IMF described credit risks as remaining “elevated” even though financial conditions have improved significantly since spring.

It said these risks, alongside weakened banks, were likely to depress the availability of new credit and damp the global economic recovery unless significant additional capital was raised to improve the health and lending capability of banking systems.

In its twice-yearly Global Financial Stability Report, published on Wednesday in Istanbul, the IMF, estimated the ultimate losses in the financial system would total $3,400bn between 2007 and 2010, an improvement from the $4,000bn estimate it published in April.

Source/Full Story: FT.com
Technorati Tags: IMF, recession

The Federal Deposit Insurance Corp. is weighing several costly — and never-before-used — options as it struggles to shore up the dwindling fund that insures bank deposits.

The agency is considering borrowing billions from healthy banks. Alternatively, it may impose a special fee on the banking industry.

Each option carries risk: Drawing money from healthy banks would take dollars out of the private sector, making that money unavailable for investment in the weak economy. But charging the whole industry a fee to replenish the fund could push weaker banks toward failure.

A third option — borrowing from the Treasury — is politically unpalatable, since it would resemble another taxpayer-financed bailout.

A fourth option would be to have banks pay their regular insurance premiums early. But this idea wouldn’t solve the fund’s long-term cash needs.

“The bottom line is, there’s no good solution,” said Jaret Seiberg, an analyst with the research firm Concept Capital. “This is a fight over which option is least bad.”

The FDIC is expected to propose a solution, possibly combining two or more of the options, at a board meeting next week.

Source/Full Story: Yahoo! Finance
Technorati Tags: FDIC

The economy could spiral into hyperinflation not seen since the early 1980s if the Federal Reserve does not tighten its monetary policy soon, Sen. Chuck Grassley (R-Iowa) warned Tuesday.

Grassley, speaking about the renomination of Federal Reserve Chairman Ben Bernanke to a second term as head of the Fed, asserted that Bernanke’s ability to hold down inflation would be the metric by which the Fed’s success would be measured.

“We won’t know for a year if he’s done a good job so far, because he shoveled money out of an airplane to save banks and the financial system,” Grassley said in a conference call with Iowa reporters. “But shoveling money out of an airplane to solve problems can be inflationary — in this case, hyperinflationary — if he doesn’t start mopping up some of the money that’s out there.”

Source/Full Story: The Hill’s Blog Briefing Room

Four more banks failed according to the Federal Deposit Insurance Corp. on Friday, bringing the year’s total to 68, and to 93 failed banks since the beginning of the recession. First BankAmericano of Elizabeth, N.J., will have its deposits transferred to Crown Bank, Brick, N.J.; Peoples Community Bank of West Chester, Ohio, will have deposits sent to First Financial Bank of Hamilton, Ohio; Integrity Bank of Jupiter, Fla., will transfer deposits to Stonegate Bank of Fort Lauderdale, Fla.; and First State Bank of Altus in Altus, Okla. will transfer deposits to Herring Bank of Amarillo, Texas.

Source/Full Story: MarketWatch

The U.S. Justice Department is investigating the market for credit-default swaps, according to Markit Group Ltd., the data provider majority-owned by Wall Street’s largest banks.

“Markit has been informed of an investigation by the Department of Justice into the credit-derivatives and related markets,” spokeswoman Teresa Chick said yesterday in an e- mailed statement in response to questions from Bloomberg News. She declined to comment on the nature of the investigation. “We will work with the Department to provide any information requested of us.”

The antitrust division sent civil investigative notices this month to banks that own London-based Markit to determine if they have unfair access to price information, according to three people familiar with the matter. U.S. lawmakers plan to regulate the $592 trillion over-the-counter derivatives market, which includes credit-default swaps blamed for helping worsen the biggest financial calamity since the Great Depression.

Source/Full Story: Bloomberg.com

Must read piece, via:  The Market Ticker

In short the banks were forcibly nationalized without a prior finding of insolvency; this is blatantly unconstitutional as a “taking” without compensation.

The raw document dump shows an insane amount of redaction.  But what’s also clear is one entry: “Good morning.  FYI, Futures up 380.”

Point a gun at people’s heads and threaten to shoot, all in the name of goosing the stock market.