The banks are bracing themselves for the coming commercial real estate meltdown:
Expect more than 1000 banks to fail, when the real tsunami hits:
The problem is that the FDIC is broke:
If the FDIC runs out of money, then Timmy Geithner will surely help!???:
The US is totally broke.
What could possibly go wrong?
WASHINGTON — Regulators shuttered four banks Friday, from Florida to California, as local banks continue to buckle across the country.
Twenty banks have toppled so far in 2010 and 185 have failed since January 2008, with regulators expecting to close dozens more by the end of this year. The Federal Deposit Insurance Corp. estimated the four failures Friday cost its deposit insurance fund more than $1 billion.
The largest bank to fail Friday was the 10-branch La Jolla Bank in California. Its $3.6 billion of assets made it the biggest bank to fail in 2010. The FDIC sold all of La Jolla’s deposits and virtually all of its assets to OneWest FSB, a thrift created last year after investors bought up pieces of the failed IndyMac Bank. The FDIC and OneWest agreed to share future losses on $3.3 billion of the La Jolla Bank’s deposits.
La Jolla Bank had a large concentration in residential real-estate loans, according to FDIC data. More than 11% of its loans were in default at the end of September. In Illinois, regulators closed the four-branch George Washington Savings Bank in Orland Park. The FDIC sold all of the failed bank’s $397 million in deposits and virtually all of its $412.8 million in assets to FirstMerit Bank in Ohio. The FDIC and FirstMerit agreed to share future losses on most of those assets if they fall in value over time.
George Washington Savings Bank was founded in 1889. More than 21% of its loans were in default at the end of September, according to FDIC data. Twenty-three Illinois banks have failed since early 2009. State regulators also closed Marco Community Bank, the only federally insured bank headquartered on Florida’s Marco Island. The FDIC sold the failed bank’s $117.1 million of deposits to Mutual of Omaha Bank in Nebraska. Mutual of Omaha also bought almost all of Marco Community Bank’s $119.3 million in assets, and the FDIC agreed to share future losses on those assets if they fell in value. Marco Community Bank had very low capital levels and had a high exposure to real-estate loans.
In Texas, federal regulators shut down La Coste National Bank, and the FDIC sold its $49.3 million in deposits to Community National Bank in Hondo, Texas. Community National Bank also agreed to buy virtually all of La Coste National Bank’s $53.9 million in assets. The Texas bank had just one branch.
Write to Damian Paletta at email@example.com
FEBRUARY 20, 2010
Source: The Wall Street Journal