Five more bank failures yesterday, 2009 total now equals 45. All five banks were quite small, I'm not sure if the FDIC is making the best use of their time. There are some good sized banks that are in significant trouble. The longer they linger, the more they will impact the taxpayer.
3/31/09: FDIC Deposit Insurance Fund (DIF) has a balance of $13 billion
5/22/09: FDIC announces special assessment to raise roughly $5.7 billion
Cost of 2nd quarter failures: $9 billion
That would leave the DIF with $9.7 billion. I'm sure the DIF has earned interest on their investments and collected additional premiums, so let's say the DIF has about $10.5 billion on hand.
My guess is that the imminent failure (my opinion) of Corus Bank will cost about $2.97 billion, dropping the DIF well below $10 billion.
The other good sized banks that are in danger of failing (my opinion again) are:
Frontier Bank
Ocean Bank
Westernbank Puerto Rico
AmTrust Bank
R-G Premier Bank of Puerto Rico
Loss estimates: $1.5 billion, $1.6 billion, $2.3 billion, $2.4 billion and $729 million respectively.
The total would be $8.6 billion, collapsing the fund into negative territory. That credit line will undoubtedly be tapped and we will be insuring our own deposits sooner than the markets think.
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