Showing posts with label FDIC. Show all posts
Showing posts with label FDIC. Show all posts

Saturday, November 11, 2023

Five bank failures in 2023 to date costing the DIF $35.569 billion

 11-3-23 Citizens Bank of Iowa: cost to the Deposit Insurance Fund is $14.8 million

7-28-23 Heartland Tri-State Bank of Kansas: cost to the DIF is $54.2 million

5-1-23 First Republic Bank of California: cost to the DIF is $13.0 billion

3-12-23 Signature Bank of New York: cost to the DIF is $2.5 billion

3-10-23 Silicon Valley Bank of California: cost to the DIF is $20.0 billion

Thursday, March 16, 2023

Discount window bailout operations for banks are now officially worse in magnitude than in 2008, though not in scope

We don't have 500 bank failures.

What we do have is Dodd-Frank 2010 limits on deposit insurance not keeping up with 2023 realities.

Unless Congress steps in and helps high depositors, there will be an exodus of high depositor accounts all across the country to money center banks which have too big to fail status and an FDIC put as systemically important enough to backstop.

This would mean many local banks will come under stress and at minimum weaken local economies even if they don't fail.

We do not need the big banks to become any more powerful than they already are.

And we certainly must not weaken local economies.

The reasons in the plumbing don't matter at this point. It's too late for that.

The $250k limit has to change. The authorities at the Fed, Treasury, and FDIC are constrained by that in what it is permissible for them to do.

Call your Senator.

Call your Representative.

 


Monday, April 3, 2017

University of Georgia historian minimizes the magnitude of foreclosures during the Great Depression, missing their significance for the value of homeownership today

Stephen Mihm, at Bloomberg here:

While home ownership became increasingly popular in the early twentieth century, the U.S. was still a majority-renter nation in 1930, though by this time homeowners numbered 48 percent of the total population. But the Great Depression knocked that figure back down to 43 percent, roughly on par with late nineteenth century levels.

Things changed dramatically in the 1940s, when home ownership levels began moving toward unprecedented highs, hitting 66 percent by 1980. Economists are still arguing over why that happened, but the most compelling explanations are pretty banal and do little to support the sentimental blather associated with home ownership.


Does this guy even know that the nonfarm foreclosure rate nearly quadrupled between 1926 and 1933?

Through 1933 there were over 1 million completed foreclosures, about 1% of US population of the time. Compare that to the current crisis. We've had 8.5 million completed foreclosures since 2004, about 2.5% of population. 

Homeownership as a cultural value in the post-war was so high because so many people lost their homes before it.

And it still is today and will continue to be, despite what some people say with an axe to grind from the safety of their sinecures.

Thursday, November 17, 2016

Once again Rush Limbaugh is full of it about the late, great recession

Here's Rush on November 15th:

In the first place, this so-called recession, the worst since the Great Depression 2008, I don't care, folks, it wasn't! ... Democrats have lived off of this economic collapse narrative for eight years now, and it's horse hockey. The truth of it is that there hasn't been a recovery from it. ... Hell, the recession that Reagan inherited in 1980 dwarfs this one. I mean the thing that Reagan inherited when he became president in 1980, this doesn't even get close to touching it, how bad it was. ... This has really been a sore spot for me for all these eight years, is how supposedly bad that was and how Obama single-handedly rescued us from it, and it was all the Republicans' doing, and it all happened because of the Iraq war. ... We haven't replaced these jobs that were lost. They keep talking about the employment rate being way down, record lows, what a crock.

Rush doesn't remember the 1980s very well, when he was in his 30s. Without a college education and a long enough personal history to compare things to while experiencing the hard knocks of life trying to get his radio career going, those years understandably seemed worse to him than they really were. Honest people everywhere recognize it was that way for them, too. Unfortunately Rush still doesn't seem to be able to measure the 1980s properly let alone put them in their proper perspective economically.

Take first time claims for unemployment. Reagan's weekly average 1981-1988 was 406,000. Obama's  weekly average 2009-2016 (still unfinished) is 373,000, 8% less severe overall. But the averages around each recession peak are much closer in severity. First time claims 1981-1983 averaged 491,000 weekly, while claims 2009-2011 averaged 477,000 weekly, the latter only 2.85% less severe overall. Peak claims in 1982 averaged 30.1 million, in 2009 only 2% lower at 29.46 million.

While the Obama jobs recession was not quite as severe in terms of the persistence of high first time claims for unemployment, full-time jobs took forever to recover under Obama. Under Reagan they had bounced back almost immediately. In 1981 the pre-recession peak in full-time averaged 83.243 million. By 1984 that level had been recovered with 86.544 million full-time jobs on average. Three years, that's it. In 2007, by contrast, the pre-recession peak in full-time averaged 121.091 million, but it took EIGHT YEARS to recover that level. Full-time finally averaged 121.492 million in 2015. That's why it hasn't felt like things are looking up until this year, in 2016.

If you were an adult in the 1980s, you probably remember the Savings and Loan crisis from 1986-1995, but you probably don't think of the Reagan era as a period of widespread bank failures comparable with what we recently experienced in the Great Recession, and you would be right. Losses from such failures as estimated by the FDIC for the period 1981-1988 total $8.9 billion. But for the period 2009-2016 estimated losses from bank failures soared to $57.3 billion, 544% higher. Even adjusted for inflation the recent losses were well in excess of 200% higher than in the 1980s. 

Or take housing. The Case-Shiller Home Price Index fell at most about 14% from the late 1970s to the mid 1980s through the Reagan recessions. I remember my dad was pretty unhappy about it because he retired in 1980 and was sitting in a house he hoped to sell for more money one day, but the value kept declining. But that was nothing compared to what happened between 2006 and 2012 when the index tanked over 36%. The foreclosure rate averaged just 0.5% in 1980-81, but soared to 3.8% in 2008-09, an increase of over 600% in the rate. Many millions of people lost homes in the Great Recession, but they are nameless and faceless to Rush Limbaugh because to him things were much worse in the 1980s. But not in reality. I saw homes in foreclosure in my own middle class neighborhood in 2007 that I never saw back in 1980 in my dad's hometown.

Perhaps the best way to visualize how much worse the most recent recession was compared with the early 1980s is to examine quarterly current dollar GDP. You had one tiny blip in quarterly current dollar GDP between December 1981 and March 1982 when it declined all of $0.01 trillion, 0.3% that's it. The truth is GDP recovered the next quarter ending June 1982 and never looked back.

Fast forward to 2007-09. There were four quarterly declines: A decline of $0.02 trillion between 12/31/07 and 3/31/08; a decline of $0.29 trillion from 9/30/08 to 12/31/08; a decline of $0.17 trillion from 12/31/08 to 3/31/09; and a decline of $0.04 trillion from 3/31/09 to 6/30/09. The previous peak level in quarterly current dollar GDP wasn't recovered until a year later, in June 2010. It took almost two years, not one quarter as in 1982. All told GDP fell from peak to trough by $0.5 trillion or 3.37%. 

The recession of 1982 was child's play compared with 2007-2009. Rush just can't see it because he was already rich during the Great Recession.

Your guiding light in this time of tumult he is not.   

Friday, January 23, 2015

Bank Failure Friday: The Second of 2015

Highland Community Bank, Chicago, Illinois, failed tonight, costing the FDIC $5.8 million.

This is bank failure number two in 2015.

Saturday, January 17, 2015

Bank failure number one of 2015 is in Crestview, Florida

First National Bank of Crestview, Crestview, Florida, failed last night, costing the FDIC $4.4 million.

6,589 institutions remained insured under the FDIC through 9/30/14.

18 banks failed in 2014, 24 in 2013, 51 in 2012, 92 in 2011, 157 in 2010, 140 in 2009, and 25 in 2008 when there were still 8,384 banks and savings and loans in the FDIC system.

The shrinkage of membership in the system by about 1,800 over this period includes the 508 failures since 2007 and about 1,287 sales, mergers and consolidations.

Costs to the FDIC system for failures since the beginning of 2007 to date are close to $90 billion.

Friday, December 19, 2014

Bank Failure Friday: the 18th of 2014 is in Mankato, MN

Northern Star Bank, Mankato, Minnesota, failed today, costing the FDIC $5.9 million.

As of September 30, 2014, there are 6,589 institutions remaining in the FDIC system.

That means that since the summer another 67 formerly independent participating institutions in the FDIC have left the system, most of which have been absorbed by larger institutions through acquisition and mergers because they were no longer able to survive and compete as stand-alone profitable banks in the new rigorous regulatory environment imposed under the Dodd-Frank legislation and Basel capital rules.

Over 300 formerly FDIC-participating institutions have suffered this same fate since the beginning of this year.

And in February 2007 there were 8,743 FDIC member institutions, 2,154 more than there are now. Only 500+ of these failed. The rest have been gobbled up by big-banking.

Wednesday, December 17, 2014

Rep. Tim Walberg (MI-7) admits everyone in the US House read the Cromnibus bill in July and knew what was in it














In a recent interview, here (Capital City Recap with Michael Cohen for Monday, December 15th), Republican Rep. Tim Walberg (MI-7) said one of the reasons he ended up voting for Cromnibus was that it overturned some parts of Dodd-Frank, a law which in his view is responsible for the middle class being "destroyed".

How putting the FDIC on the hook for derivatives is good for the public in a crisis like we just had is beyond me. The FDIC went severely into the red, had to be backstopped by the very public it serves, and then was replenished by raising rates on member banks which have crushed the small and regional banks who behaved honorably, and raised costs for everyone who uses a bank. The whole process has accelerated bank sales and consolidations, reducing competition in the industry. 

Well, at least Walberg acknowledges the middle class is in big trouble, unlike some people. But becoming "unbanked" is hardly at the top of the list of their troubles like being unemployed is.

Walberg also stated that voting against Cromnibus and shutting down the government as a possible consequence was not an option because that would have punished members of the American military who wouldn't get their paychecks, presumably at this the happiest time of the year. No, you wouldn't want to shut down the government and anger a government employee, no sir.

Maybe the most interesting thing Walberg said, however, and doubled-down on in the interview is that everyone in the House knew what was in the massive spending bill because they had all read the individual components of the bill in the form of individual legislation which they had passed in July and sent to the Senate piecemeal . . . all to die under the withering glare of Dirty Harry Reid.

So all the crap that's funded in the bill Rep. Tim Walberg is admitting to knowing about ahead of time, and voting for.

Read like what, here, but not after meals.

Monday, December 15, 2014

Federal Reserve and FDIC lose power

Electrical, but hey! we can dream can't we?

From the story here:

"Most power at the State Department was lost and employees were told to work as best they could. Other buildings affected included the Federal Reserve, the General Services Administration, Metro’s Smithsonian subway station, the Labor Department, the U.S. Park Police and the Federal Deposit Insurance Corp."

Maybe Ted Cruz & Company have been trying to shut down the government the wrong way!

Saturday, November 8, 2014

Bank Failure Friday: number 17 on the 7th of November

Frontier Bank, FSB, Palm Desert, California failed last night, costing the FDIC $4.7 million. It was the seventeenth bank failure this year. 6,656 institutions remain insured within the FDIC system through the first half of the year. That's down from 6,891 at the beginning of the year, or 3.4%, as mergers and acquisitions continue to reduce the overall number to a much higher degree than do bank failures. Stricter capital and regulatory rules continue to put pressure on relatively smaller banks, which find it difficult to remain profitable under them.

Friday, October 24, 2014

Bank Failure Friday: the 16th in 2014

The National Republic Bank of Chicago, Chicago, Illinois, failed tonight, costing the FDIC $111.6 million, a fairly big one by recent standards.

The bank was an Indian-American-owned bank, specializing in the hotel and motel lending business. 

Friday, October 17, 2014

Bank Failure Friday is back with the fifteenth in 2014 in the state of Maryland

NBRS Financial, Rising Sun, Maryland, failed tonight, costing the FDIC $24.3 million. It is bank failure number fifteen in 2014.

FDIC insured institutions number 6,656 through June.

Friday, July 25, 2014

Bank Failure Friday: GreenChoice Bank, fsb, Chicago, Illinois, failed tonight

GreenChoice Bank, fsb, Chicago, Illinois, failed tonight, costing the FDIC $14.2 million.

The bank is bank failure number 14 in 2014, and number 506 since February 2007.

Sunday, July 20, 2014

Eastside Commercial Bank, Conyers, Georgia, failed on Friday, July 18th, 2014

Eastside Commercial Bank, Conyers, Georgia, failed on Friday, costing the FDIC $33.9 million. 6,730 institutions remained under the FDIC through March 31, 2014.

It's bank failure number thirteen so far in 2014, and number 505 since February 2007.

Friday, June 27, 2014

More than 7 years after the crisis began, banks are still failing

The Freedom State Bank, Freedom, Oklahoma, failed tonight, costing the FDIC $5.8 million. It's the 12th failure of 2014.

Metropolitan Savings Bank, Pittsburgh, Pennsylvania, kicked off the wave of bank failures in the current crisis on February 2, 2007, with assets of $15.8 million. About $1.2 million in deposits exceeded the FDIC insured limit at the time. It had been the first bank failure in the country since 2004 and the first of a string of failures which now totals 504 banks and close to $89 billion in covered losses.

Stay tuned. 

Friday, June 20, 2014

Bank Failure Friday . . . two tonight: the 10th and 11th in 2014

Reported here and here.

The FDIC still insures 6,730 institutions through March 31, 2014.

In February 2007, over 500 bank failures ago, the FDIC still insured 8,743 institutions, meaning about 1,500 additional institutions have succumbed to acquisition by bigger banks which have swallowed them up since the financial panic.

Call it income inequality, banker style.

Saturday, May 31, 2014

Bank Failure Number Nine: Slavie Federal in Bel Air, Maryland

Slavie Federal Savings Bank, Bel Air, Maryland, failed last night, costing the FDIC $6.6 million. It's the ninth bank failure in 2014, and number 501 since February 2007.

Friday, May 23, 2014

Bank Failure Friday: The 500th bank failure since February 2007 and the 8th failure in 2014

The banking crisis which began in 2007 has reached its 500th milestone. Columbia Savings Bank, Cincinnati, Ohio, failed today, the eighth bank failure of 2014, costing the FDIC $5.3 million.

"Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system", says the press release, as says every press release going back to the first failure of the current banking crisis seven years ago.

Instead read: Congress created the FDIC in 1933 to make the public believe the banks are sound even though they are not. Hell, the banks are designed under the Federal Reserve and the FDIC to be precisely NOT SOUND.

Extend and pretend works its way through, ever so quietly, ever so unremarked.