Eye of the Hurricane II by Kendell Lang

EYE OF THE HURRICANE II

by

Kendell Lang, New Media Consultant

Back in September I wrote, "the Banking system is Under water; according to the FDIC website, we have already seen more than THREE times as many banks Fail this year, than the last 10 years put together.  Some industry analysts are predicting more than 200 bank failures in 2009. Does that seem like a reasonable number?"

When I wrote that article in September the list was 94 failed banks.  Anybody keeping track?  Guess what? Since that article 84 more banks failed!   CLICK HERE TO SEE THE ENTIRE LIST OF 178 BANKS CLOSED IN 2009.  We only have to see 22 more banks fail to hit the predictions and we are definitely on that pace.

Did you know:

• On Friday, November 6, 2009, the FDIC announced the closure of 5 banks.
• United Commercial Bank, San Francisco, CA was closed by the California Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver.
• United Commercial Bank  was not just another local bank, it had total assets of $11.2 billion and total deposits of approximately $7.5 billion.
  
  
  
  
• Click the FDIC logo to go to the Press Release
• No advance notice is given to the public when a financial institution is closed. All deposit accounts, excluding certain brokered deposits, have been transferred to East West Bank, Pasadena, CA ("assuming institution") and will be available immediately. The former United Commercial Bank locations will reopen as branches of East West Bank.
• Gateway Bank of St. Louis, Prosperan Bank of MN, Home Federal Savings Bank of MI and United Security Bank of GA were also closed and taken over by the FDIC on Friday.

Here's why I believe regional banks are failing. While larger financial institutions have received aid from the federal government, local and regional banks have found themselves left adrift. Nothing has changed in the fundamentals. Like their larger counterparts, many of these banks made risky loans to individuals and real estate developers during the boom years and are now facing large numbers of defaults as the Second Great Depression drags on.

Rising unemployment (THE HIGHEST SINCE 1983) has made it difficult for many individuals to keep up with expenses, and businesses are feeling the crunch of consumers’ reduced spending power. As a result, regional banks are left holding loans their customers can’t repay.

Problem banks list LOOMS LARGE! The FDIC keeps a list of “problem banks,” though it does not disclose the names to the general public out of fear that depositors at those institutions may prompt a “run on the bank.”  In June, the agency said 416 banks were at risk of failure — the highest level in 15 years!

Federal coffers running dry. An average of 11 banks have failed per month this year, and the federal coffer is thinning under the massive strain. The fund now stands at $7.5 billion, down significantly from $45 billion a year ago.  Folks...this is UNSUSTAINABLE!!!

So is our media asleep at the wheel or what? Why aren't we hearing about the most recent bank closures? The FDIC is shutting banks every Friday as part of a recurring theme to shut them down after close of business on Friday, and then re-open them on the following Monday under the control of some other bank. The dirth of any decent news coverage is irresponsible. I am wondering how long the FDIC's funding can support the losses. What's happening to our economy is unnerving, and banks are at the center of the crisis. The problem is...through all the economic stimilus, the root problem has not been solved and the banks continue to operate (and fold) acting as if everything is "business as usual."

This is not business as usual and we will pay the piper.