Failure Friday

Just one so far tonight: Bank of Lincolnwood. Tiny, near the top of the bad banks list.

UPDATED BAD BANKS LIST

- I have shortened the list to the 100 worst banks

- 130 banks have non-accrual ratios over 100%

- 218 banks have non-accrual ratios over 75%

- Please refer to the post made on May 8 for calculation method

Failure Friday

Two more banks shut down today, 2009 total is now at 36. The FDIC also released its new assessment plan. According to my calculations, it will bring a whopping $5.7 billion into the fund. That would cover this week's failures. I am not impressed.

One may ask: won't this assessment plan hurt the banks that are in most need of the insurance? The answer is: of course.

Raising expenses during a crisis is not a great idea. Maybe charging ZERO premiums from 1995 - 2005 wasn't such a good idea either.

http://www.fdic.gov/news/news/press/2009/pr09074.html

Failure Thursday?

(2 tables above: bad banks on the left, failures on the right. please click to expand)

It has finally happened:

BankUnited, FSB Closed

http://www.fdic.gov/news/news/press/2009/pr09072.html

BankUnited will be the successor bank, acquired and run by a private equity consortium. WE PAID FOR THIS PEOPLE. PRIVATE EQUITY GETS A SWEETHEART DEAL ON OUR BACKS.

The Deposit Insurance Fund is estimated to take a hit of $4.9 billion on this one. That brings the 2009 loss to over $10.3 billion. The FDIC reported a balance of just under $19 billion at the end of 2008.

It is a good thing Congress approved a credit line of up to $500 billion for the FDIC. That is what I mean about insuring your own deposit. If (When) the FDIC taps that line, the Treasury must issue debt to front the cash.

Failure #34 is a big one folks, another one off the Bad Banks list.

Failure Friday Fun

Please click on tables to expand.

Westsound Bank was the only one closed today. It was at the top of the Bad Banks list. How do you get to the top of the Bad Banks list?

Net Bad Loans Ratio

bad loans = assets at least 30 days delinquent + non-accrual assets

ratio = (bad loans - bad loans guaranteed by Federal Gov't) / (loan loss allowance + Tier 1 capital)

Net Non-Accrual Ratio

ratio = (non-accrual assets - non-accrual assets guaranteed by Federal Gov't) / (loan loss allowance + Tier 1 capital)


I modified the last column of the failure list:

ratio = (total deposits - FDIC loss) / total assets