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horgad
1000+ Penny Miser Member
USA
1641 Posts |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 07/26/2008 : 05:40:01
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| FYI: 2 more banks went belly up and are being taken over by the FDIC this weekend. The banks are small and in Nebraska and the FDIC is promising that everybody will get 100% even if you are over the 100k limit. So I expect a smooth transition and no angry crowds for this one. |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/03/2008 : 02:35:05
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SAN FRANCISCO (MarketWatch) - First Priority Bank was shut down by regulators on Friday, making the small Florida lender the eighth bank failure in the U.S. so far this year.
4:04pm 08/01/2008
SunTrust agreed to take on the deposits of First Priority, the Federal Deposit Insurance Corporation said in a statement late Friday. The six branches of First Priority will reopen on Monday as branches of SunTrust, it added.
At the end of June, First Priority had $259 million in assets and total deposits of $227 million. There were roughly $13 million in uninsured deposits held in about 840 accounts that potentially exceeded insurance limits, the FDIC estimated. However, this amount will probably change after the FDIC gets more information from customers.
SunTrust also bought about $42 million of the failed bank's assets. The FDIC sold another $14 million of First Priority's assets to LNV Corporation, a unit of Beal Bank Nevada. The FDIC said it will keep the remaining assets and sell them later.
This bank failure will cost the FDIC's insurance fund $72 million, the regulator estimated.
"Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
The number of bank failures is expected to surge in coming years as the credit crunch slows economic growth and hammers some lenders that grew too fast during the recent real-estate boom. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/03/2008 : 14:16:57
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Interesting quote I found today:
"IndyMac was a high-flying mortgage lender specializing in exotic and risky loans sometimes called Alt-A loans," NPR's John Ydstie tells Weekend Edition guest host Linda Wertheimer. For some of those loans, IndyMac didn't require borrowers to provide documentation of income.
"It worked great during the housing boom. They made hundreds of millions of dollars in profits for a couple of years," Ydstie says. "But when home prices started falling and loans began to go sour, they fell very hard."
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“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 08/03/2008 : 15:18:38
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The problem was a lot of banks just figure the increase value of the real estate would protect them. No one is going to let a loan go bad when the house is worth more than is owed. Look at the historical defaults on 1st lien primary mortgages. It isn't very high. They saw a way to make money and the math backed it up. That is the problem with math...it doesn't think. You can make a lot of money using math, but you have to think too. The historical data had a lot of history of people putting 20% down, stable credit, slowing increasing property values, and etc. It didn't include everyone buying housing (temp. demand), cheap credit, and no money down loans. It made the historical data miss leading. I would still guess that default rates on non-cash out, 20% down, prime rated, 1st lien mortgages is still pretty low even today.
A lot of hedge funds figured they could make a ton of money being highly leveraged. All the models showed they could sell assets if they had to deleverage, and the computer models had tons of historical data to help protect them. Again no one was thinking can we really sell at a fair price with all of us having the same type of assets and being highly leveraged (forcing the sells)? Well of course not... all the pass buyers are now going to be selling... with no major buyers around.
You can be so smart that you make stupid mistakes, because they think they have everything covered. It was going to take 1 in XXX,000 chance to kill them based on historical data. No one considers the fact that everyone is doing the same thing and being leveraged 20+ to 1 now makes the historical data a mute point.
They are the stupidest smart people you might ever meet. They aren't idiots... a lot of them had MBA from highly ranked Ivy league schools. They just forgot to think outside their models.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 08/04/2008 : 08:10:36
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quote:
Originally posted by legacypac
SAN FRANCISCO (MarketWatch) - First Priority Bank was shut down by regulators on Friday, making the small Florida lender the eighth bank failure in the U.S. so far this year.
4:04pm 08/01/2008
SunTrust agreed to take on the deposits of First Priority, the Federal Deposit Insurance Corporation said in a statement late Friday. The six branches of First Priority will reopen on Monday as branches of SunTrust, it added.
At the end of June, First Priority had $259 million in assets and total deposits of $227 million. There were roughly $13 million in uninsured deposits held in about 840 accounts that potentially exceeded insurance limits, the FDIC estimated. However, this amount will probably change after the FDIC gets more information from customers.
SunTrust also bought about $42 million of the failed bank's assets. The FDIC sold another $14 million of First Priority's assets to LNV Corporation, a unit of Beal Bank Nevada. The FDIC said it will keep the remaining assets and sell them later.
This bank failure will cost the FDIC's insurance fund $72 million, the regulator estimated.
"Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
The number of bank failures is expected to surge in coming years as the credit crunch slows economic growth and hammers some lenders that grew too fast during the recent real-estate boom.
At this point, I am guessing that they have a list of them to close, but they can only do so many a week and still keep things orderly. So every Friday we will see one or two...but that is just a theory. |
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/04/2008 : 14:10:04
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Agreed horgad - they must have a list.
Issues FDIC must consider:
1. FDIC staff availability (50 agents for the little Minn bank in the NY Times article)
2. Have they lined up a buyer for the deposits and branches
3. Have they worked out all the logistics - where to stay, rental cars, meeting rooms, police support, where to park, where to get large amounts of pizza
4. Cooperation of other agencies
5. How much panic do they want to cause at one time
So they just can't shut down a dozen banks on a single Friday.
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“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 08/04/2008 : 15:12:31
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here is a good link for those of you thinking of paying down debt. gives you some other options.
You must be logged in to see this link. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/04/2008 : 16:26:24
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Something to consider:
From Llegacypac/SAN FRANCISCO (MarketWatch)
...."Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
Anyone from the Philadelphia area might remember PSFS, the Pennsylvania Savings Fund Society was a relatively strong Savings and Loan until it was forced to merge with a weaker Savings and loan per the FSLIC (The FDIC for S&L's.)
This in turn weakened PSFS and it in turn was eventually taken over by another bank. So much for the idea that a strong bank can take over a weak bank and not suffer any ill effects.
You must be logged in to see this link. (Warning: PDF)
Quote: PSFS did not exist as a legal entity at the time of the robbery and that the bank he was convicted of robbing was insured by the FSLIC, not the FDIC...
Wikipedia doesn't mention the fact that PSFS was under the jurisdiction of the FSLIC. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 08/04/2008 : 17:12:57
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quote:
Originally posted by horgad
quote:
Originally posted by legacypac
SAN FRANCISCO (MarketWatch) - First Priority Bank was shut down by regulators on Friday, making the small Florida lender the eighth bank failure in the U.S. so far this year.
4:04pm 08/01/2008
SunTrust agreed to take on the deposits of First Priority, the Federal Deposit Insurance Corporation said in a statement late Friday. The six branches of First Priority will reopen on Monday as branches of SunTrust, it added.
At the end of June, First Priority had $259 million in assets and total deposits of $227 million. There were roughly $13 million in uninsured deposits held in about 840 accounts that potentially exceeded insurance limits, the FDIC estimated. However, this amount will probably change after the FDIC gets more information from customers.
SunTrust also bought about $42 million of the failed bank's assets. The FDIC sold another $14 million of First Priority's assets to LNV Corporation, a unit of Beal Bank Nevada. The FDIC said it will keep the remaining assets and sell them later.
This bank failure will cost the FDIC's insurance fund $72 million, the regulator estimated.
"Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
The number of bank failures is expected to surge in coming years as the credit crunch slows economic growth and hammers some lenders that grew too fast during the recent real-estate boom.
At this point, I am guessing that they have a list of them to close, but they can only do so many a week and still keep things orderly. So every Friday we will see one or two...but that is just a theory.
Wait until Football season starts...When half of the nation spends the entire weekend watching football and drinking beer. That'll provide further cover for unpopular news releases from the FDIC........ and the FED |
"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 08/05/2008 : 05:37:43
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quote:
Originally posted by pencilvanian
Something to consider:
From Llegacypac/SAN FRANCISCO (MarketWatch)
...."Despite the challenges facing all banks today, the current environment also presents opportunities for strong institutions like SunTrust to expand our client base," James Wells III, chief executive of SunTrust, said in a statement.
Anyone from the Philadelphia area might remember PSFS, the Pennsylvania Savings Fund Society was a relatively strong Savings and Loan until it was forced to merge with a weaker Savings and loan per the FSLIC (The FDIC for S&L's.)
This in turn weakened PSFS and it in turn was eventually taken over by another bank. So much for the idea that a strong bank can take over a weak bank and not suffer any ill effects.
You must be logged in to see this link. (Warning: PDF)
Quote: PSFS did not exist as a legal entity at the time of the robbery and that the bank he was convicted of robbing was insured by the FSLIC, not the FDIC...
Wikipedia doesn't mention the fact that PSFS was under the jurisdiction of the FSLIC.
SunTrust has 1600 branches. The FDIC basically gave them the deposits to a failed 6-branch bank. The real problem in bank mergers are the ones where a Wachovia buys a Golden West or BofA buys a Countrywide, because the merger is premised on a certain level of assets being there (loans and other investments having a certain value), and those may need to be written down after the deal closes. Look for huge write offs by BofA and WB on those deals. As I understand the SunTrust deal, they didn't buy any assets so this risk does not apply here. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/05/2008 : 11:10:35
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| First Priority had $259 million in assets. I don't know for sure, but thinking about what I know it takes to operate a 6 branch bank, the $42 Million in Assets bought by SunTrust is likely stuff like cash in the vaults and ATMs, deposits with the FED, buildings, furniture and equipment required to operate the branches, and maybe some off site ATM machines. Could also include some outstanding lines of credit tied to the deposit accounts. I doubt that Sunlife bought many actual loans in that figure. FDIC gets to keep all the loans until they can sort out the good from the bad. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 08/05/2008 : 19:26:14
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I will agree with the both of you Lemon Thrower and Legacypac, that this deal seems to be of little concern for Sun Trust, but what about another forced merger or two down the road with a not-so stable bank?
This mess is far from over and who knows what bank may still remain standing ten years from now?
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 08/06/2008 : 12:43:17
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quote:
Originally posted by pencilvanian
I will agree with the both of you Lemon Thrower and Legacypac, that this deal seems to be of little concern for Sun Trust, but what about another forced merger or two down the road with a not-so stable bank?
This mess is far from over and who knows what bank may still remain standing ten years from now?
FDIC can't force bank mergers.
Bank deals are reverse of regular M&A. Normally, you want to get the assets and avoid liabilities, because the value in a regular business is the assets. In banking, the value is the deposits and customer base. Deposits are a liability of the bank. So the owner pays you cash and you owe the customer. You take that deposit and make loans, etc. The so-called assets of the bank are loans and other investmetns. If the bank has failed, its generally because these loans are not being repaid, so the best sort of deal is to get the deposits but not the assets. Very backwards. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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jadedragon
Administrator
Canada
3788 Posts |
Posted - 08/07/2008 : 04:29:56
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You must be logged in to see this link.
A very technical paper on bank failures that is unlikely to help you win my contest, but interesting graphs and some interesring points.
2 Because of the nature of the resolution process, we deliberately omit troubled thrifts, including those resolved by the Resolution Trust Corporation, which kept insolvent thrifts open during the resolution process. CAMELS is an acronym for the six components of the regulatory rating system: Capital adequacy, Asset quality, Management, Earnings, Liquidity, and (since 1998) market Sensitivity. Banks are rated from 1 (the best) to 5 (the worst), and banks with a composite rating of 4 or 5 are considered problem banks. A rating of 4 generally indicates that the bank exhibits unsafe or unsound practices or is in an unsafe or unsound condition, while a rating of 5 means that the bank's practices or condition are extremely unsafe or unsound. |
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw.
Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony
Passive Income blog |
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Bank Run...Right Here, Right Now
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