Federal regulators have closed two small Western banks, bringing to seven the number of U.S. banks that have failed this year.
The banks, owned by First National Bank Holding Co. of Scottsdale, Arizona, will have their deposits and some assets transferred to Mutual of Omaha Bank, according to the Federal Deposit Insurance Corp., or FDIC…
Bill Uffelman of the Nevada Bankers Association called the FDIC action “a reflection of the times for the banks.” The world’s largest banks and securities firms have announced more than $468 billion in writedowns and credit losses since the start of 2007.
Sheila Bair, chairwoman of the FDIC, has said bank failures will increase as foreclosures rise and home sales slump.
On July 11, regulators closed IndyMac Bancorp, a California-based mortgage lender with more than $19 billion in deposits. Bair said the federal government might offer to share in the losses to entice buyers to pay a higher price for IndyMac’s assets.
Then, there’s this from a serious source in the investment community:
Current estimates are that less than 100 banks will fail during the current credit crisis, a much smaller number than closed during the saving and loan debacle of the late 1980s.
But, those estimates may be low. Bill Gross, an extremely prominent investor and head of Pimco, recently wrote that total losses related to the housing market will hit $1 trillion. About $450 billion of those write-downs have made it through the system. That leaves a potentially massive burden on the banking system going forward.
The idea that only 100 banks will fail in the next year is wishful thinking.
Statements of a trillion$ of losses aren’t limited to Bill Gross, btw.
The greedy scumbags are doing their best to do this country in.
I’m not trying to sound trite, but so? This is news, but it’s not surprising.
The US capital markets are in trouble. 10 years ago the US was the world’s largest lender, now the US is world’s largest debtor. Oversight of the US capital markets has been traded for easy debt capitalization. And now people are shocked – give me a break.
Go ahead, say it, ‘R E C E S S I O N’. It’s pretty clear that the mess is huge and there won’t be any miraculous Greenspan quick fixes to straighten this one out.
Anyone else remember ENRON. I bet more dollars have changed hands during this presidency than any other, question is, in whose hands did it all end up in. Sure as hell hasn’t been circulating.
Republicans should come up with another fantasy wealth bubble idea in order to kick start the economy.
Let the left pick one for a change. Being the left leaning wingding that I am, I’d like to propose solar energy.
“Oversight of the US capital markets has been traded for easy debt capitalization”
Sorry to disagree. In my opinion, it was not that well thought out by our government. Neither was there a customer or market driven need for “easy debt capitalization”.
It was simply about greed, and to hell with the good of the country. Oversight was traded for “contributions” to politicians, and payoffs in the form of consulting fees and cushy jobs, after the politicians left office.
Too many people buy into the theoretical propaganda put out by corporations and neo-con politicians – even after their own eyes tell them it’s baloney. Many still don’t want to believe that smoking causes cancer and heart disease. (It’s OK – my iPod can cook pancakes. What’s to worry about?)
I agree with Stu. It’s all about greed. However, it wasn’t just from the top. It came from the bottom, too. If people were a bit less ignorant about what makes the economy tick, they wouldn’t have gotten themselves into the mess so many see themselves in.
You can’t blame the lender for everything. The people accepting the money are just as much at fault.
Which is why any kind of bailout is bad. Let’s the do the math:
There are 300,000,000 people in the US. The bailout is going to cost US taxpayers $400,000,000,000. Do some simple division and that comes to $1,333 per person in the US.
And the sad part is that we don’t have a choice but to pay it. We don’t write a check. We don’t make a withdrawal from the bank. We don’t send a money order. Everything each of us owns is now worth $1333 less (or will be come Monday morning).
Each of us has paid $1333 to “help” a bunch of people who were too stupid to look at a $500,000 house and say, “I can’t really afford that on my $50,000 salary.”
Welcome to the land of The Managed Economy, folks.
So let the banks fail. Why is the government bailing them out?
It’s about greed and stupidity. If you loan people money when the numbers say they can’t make the payments then it is the lenders fault.
Sticking in balloon payments and changing interest rates when the person can barely cover the rate you first give them is asking for a failed loan.
The thing is the banks thought the person that took out the loan was the one that was going to get screwed over with higher interest and it turned out to be the smarmy leanders.
The banks are constantly trying to get me to borrow money and go in to debt.
Credit card companies are still giving out cards without even checking at least on occasion.
In fact the entire stolen ID scam can only occur because people aren’t properly checking IDs, matching photographs with the person, and getting thumb prints.
The lenders were greedy, trying to get people into dept so they could collect the interest of mega rates and now they are stuck with a lot of bad dept to write down.
I do not feel sorry for the people at the top. Unfortunately they aren’t likely to be the ones that get hurt.
#8
> If you loan people money when the numbers say
> they can’t make the payments then it is the
> lenders fault.
Lenders lent money to people that may not have been able to make their payments and as the market changed some are now unable to make their payments. Furthermore, the people applying for the loan are as much, if not more, at fault as the lenders. If you borrow more than you pay, that is your own stupidity. The rest of us should not be on the hook because someone was financially foolish.
People need to learn to take responsibility for their actions.
#5 and #6 and #8
Of course it’s about greed. However, the point I was making had nothing to do with that. The US government has given up much of it’s oversight role either by diminishing laws or underfunding. Other counties will restrict the amount of subprime mortgages any other types of risk lending. For example, 1-2% is typical in G8 nations for subprimes – and that includes foreign mortgages.
That creates too much risk for foreign capital in the US now, hence the lack of available liquidity and the need of government to step in once again. “Interestingly” the same lending institutions that have benefited the most from governmental changes in oversight are the same one’s giving the US treasury it’s bond rating. Hmmmmmm……
#10, the need of government to step in once again.
I think the gov should let the chips fall where they may. It’ll be rough for a few years, but things will be stronger in the end. If these companies are saved by the gov every time they screw up, where is the incentive to prevent it from happening again?
I agree that the government oversight has been lax. They need to step in but at the same time they need to take back control of the money supply (as per they duties per the Constitution).
By giving up the oversight to the same people who print the money, they are asking the fox to guard the hen house and then not shooting the fox when he’s caught eating a chicken.
So it this gloom and doom news just another excuse for the Government to bail out the banks for making the sketchy loans in the first place? That’s what happened with the S&Ls. That was some $30 Billion, back in the 80s. Now, somehow the regulators looked the other way until a trillion bucks of bad loans were signed. Probably because these very same BANKS lobbied hard for the leeway. Now they expect to be SAVED from their own shortsightedness, on the taxpayers’ back! If Congress (mainly Republicans) really were true to the Deregulation philosophy. Then they shouldn’t be subsidizing institutions that screw up, due to it. It was those very regulations that they dissolved, that kept business from risky speculation with other peoples’ money. But we’ve seen how the government employs a double standard, in all things.
It’s really socialized banking. It’s kind of like a teenager with Daddy paying for the credit card.
#6, Tom,
a bunch of people who were too stupid to look at a $500,000 house and say, “I can’t really afford that on my $50,000 salary.”
Could you cite ANY bank, lender, mortgage, or other financial institution that has ever made a $500,000 mortgage (or even other loan) on only a $50,000 salary?
Otherwise your comment is as full of shit as the rest of your post.
If people were a bit less ignorant about what makes the economy tick, they wouldn’t have gotten themselves into the mess so many see themselves in.
Ya, right. My concern is the health of my family’s economy, not the country’s.
All the people that had good jobs and saw them moved overseas are to blame?
The leading cause of bankruptcies in America is sudden / unexpected medical problems.
And the sad part is that we don’t have a choice but to pay it.
Yes we do. Most banks are supposed to be regulated by the FDIC. That includes insuring deposits up to $100,000. The banks pay insurance premiums. Use that fund to bail out the banks.
Each of us has paid $1333 to “help” a bunch of people who were too stupid to look at a $500,000 house and say, “I can’t really afford that …
Uumm, no individual person is being bailed out. Only the banks. It doesn’t matter how many people lost their jobs or how crushing the medical debt load is, the people aren’t being helped.
#14, Could you cite ANY bank, lender, mortgage, or other financial institution that has ever made a $500,000 mortgage (or even other loan) on only a $50,000 salary?
Take a look at the last few that have failed. Lenders used a tool that was supposed to help realtors flip properties — only requiring them to pay a small stipend for the first two years of the mortgage — for standard mortgages. This allowed people to get loans they would never in their entire life qualify for.
The leading cause of bankruptcies in America is sudden / unexpected medical problems.
Perhaps they should have lived within their means. I could afford a much larger house if I didn’t have other expenses I have to contend with — insurance being one of them. You don’t see me running down to the local bank and asking them to help me keep up with the Jones’.
Yes we do. Most banks are supposed to be regulated by the FDIC. That includes insuring deposits up to $100,000. The banks pay insurance premiums. Use that fund to bail out the banks.
You missed my point. The government is going to force each of us to do it their way, not what makes the most sense.
Uumm, no individual person is being bailed out. Only the banks. It doesn’t matter how many people lost their jobs or how crushing the medical debt load is, the people aren’t being helped.
Wrong. Part of the bailout package is to back loans so these people can refinance the loans they shouldn’t have gotten into to start with. Yes, it is keeping the leaking canoe afloat and throwing the passenger a life jacket. Shouldn’t have got into that canoe to start with.
Nice legacy for W.