Saturday, December 5, 2009

Six More Banks Fail ?

After a brief holiday respite, bank failure Friday came back with a vengeance yesterday. The FDIC and its fellow regulators closed six institutions, bringing the total to 130 for the year. (See our complete list of failed banks [1] this year.)

By far, the largest institution to go down was Cleveland-based savings and loan AmTrust [2]. It’s the fourth largest bank or thrift to fail this year. As of late October, AmTrust had total deposits of approximately $8 billion. Its demise is expected to cost the FDIC’s deposit fund about $2 billion.

In a geographic departure, New York Community Bank of Westbury, New York entered into an agreement with the FDIC to assume all of AmTrust’s deposits and its 66 branches. Until now, New York Community only had branches in New York and New Jersey.

The Wall Street Journal has a detailed account of AmTrust’s slow demise [3], including how politicians in Cleveland and Washington interceded with regulators to give the thrift more time, thereby likely increasing the ultimate cost to the FDIC.

Also failing on Friday were three banks in Georgia. The Peach State now leads the country in bank failures, with 24 this year. Among the failures was Buckhead Community Bank [4], located in a tony suburb of Atlanta. The Atlanta Journal-Constitution describes the bank [5] as “founded by Atlanta business royalty to cater to a wealthy clientele.” It had total deposits of approximately $838 million. The failure will cost the FDIC’s deposit fund an estimated $241 million.

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I have said from the beginning that this is not "the greatest transfer of wealth in history". Rather it is the greatest "CONSOLIDATION OF WEALTH" .And we still have the same Banksters leading this charade that got us into this charade.

2 comments:

  1. am trust was once cleveland trust, with its unseen altar of skulls...

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  2. from Politics and bank regulation don’t mix - The Federal Deposit Insurance Corp tried to seize and sell Cleveland thrift AmTrust last January but local politicians intervened. In the end, the bank still went bust 11 months later – a delay that may have increased losses to the U.S. regulator’s funds. As Congress debates banking reform, AmTrust provides a useful warning that the regulatory apparatus needs to be kept free from politics. Regulators had known for some time that AmTrust was troubled. AmTrust’s chief regulator turned down the bank’s request for TARP money last fall. It also hit AmTrust with a cease-and-desist order, instructing management to change lending practices and boost capital by December 31. When AmTrust missed the deadline the FDIC decided to step in. But Ohio Congressman Steven LaTourette and Cleveland mayor Frank Jackson convinced Treasury and the White House to keep the regulators at bay. Bythe time FDIC finally seized AmTrust on Dec. 4, its tangible common equity – the capital it has to withstand loan losses – had fallen to $276 million from $943 million the year before. The cost of the bank’s failure to FDIC: $2 billion. The price tag to the FDIC would’ve been lower had it acted sooner, according to the Wall Street Journal.

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