If the FDIC runs out of money, then Timmy will surely help:
Let’s see what happens if 500 (or even 1000) banks will fail in 2010:
Dec. 19 (Bloomberg) — Seven U.S. banks were seized by regulators, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.
Banks with $14.4 billion in total assets were closed yesterday in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.
Two of the closures were in California. The assets and deposits of Federal Bank of California in Santa Monica were bought by closely held OneWest Bank, which acquired IndyMac Federal Bank this year. Imperial Capital Bank was bought by City National Corp., the Beverly Hills-based parent of City National Bank, which expanded in Southern California with the purchase.
“Imperial Capital Bank is a very good fit for City National, given that eight of its nine locations are in communities we serve,” City National Chief Executive Officer Russell Goldsmith said in a statement. “We’re pleased to contribute to the increased stability of the banking system.”
Federal Bank was the biggest lender seized yesterday, with $6.1 billion of assets and $4.5 billion in deposits, according to the FDIC. Based in La Jolla, Imperial Capital had assets of $4 billion and $2.8 billion in deposits.
Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.
‘Larger Number’ of Failures
The budget “will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary,” FDIC Chairman Sheila Bair said in a statement. Yesterday’s bank closings will cost the agency about $1.8 billion, according to the FDIC statements.
U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody’s Investors Service said last month.
The following table lists the banks seized yesterday. Asset figures are in millions of U.S. dollars.
FAILED BANK BUYER ASSETS First Federal Bank OneWest Bank 6,100 Santa Monica, California Pasadena, California Imperial Capital Bank City National 4,000 La Jolla, California Los Angeles Peoples First Hancock Bank 1,800 Panama City, Florida Gulfport, Mississippi New South Federal Beal Bank 1,500 Irondale, Alabama Plano, Texas Independent Bankers' None 585.5 Springfield, Illinois RockBridge Commercial None 294 Atlanta Citizens State None 168.6 New Baltimore, Michigan
Last Updated: December 19, 2009 00:00 EST
By Dan Reichl