Tag Archives: Bank Failure

State and federal regulators closed six lending institutions over the weekend -- three in Georgia and one each in Arkansas, Florida, and Minnesota. It brings the number of bank failures for the year to 157, and follows news last week that the FDIC has lowered its operating budget for 2011 based on the expectation that institutional closings will slow in the year ahead. The largest of this weekend's closings was the Bank of Miami in Coral Gables, Florida, with $374.2 million in deposits and assets totaling $448.2 million.

The number of bank closings has slowed in recent months, and that's given the FDIC reason to believe that the worst phase of institutional collapses is behind us. The FDIC's board of directors has approved a $3.96 billion operating budget for 2011, which the agency described as ""down slightly from the 2010 budget,"" when the board raised the amount by 55 percent to cope with an elevated number of bank failures. Officials are touting the fact that no increase is planned for the upcoming year as a sign the financial sector is at least stabilizing.

After a three-week lull, bank closings have returned. State and federal regulators shut down two community-based lenders on Friday, one in Michigan and one in Pennsylvania. There have been 151 bank failures so far this year. The FDIC said last month that its list of so-called problem banks has grown. There are now 860 insured financial institutions under greater scrutiny from the federal agency because capital levels have fallen dangerously low.

In a move reminiscent of the last time the United States was in such dire financial straits, the FDIC announced recently that it has begun an investigation of executives and other employees of failed banks. In the 1980s and 1990s, the savings and loan (S&L) crisis prompted the government to investigate and prosecute hundreds of bank insiders, sending more than 1,000 to prison, and collecting $4.5 billion. This time around, the FDIC has opened more than 200 civil cases and is seeking to recover around $2 billion.

The credit analytics firm FICO has released the results of its fourth-quarter survey of bank risk professionals. The consensus is that lending will remain tight well into next year and a greater number of banks could face failure, but fewer bankers believe delinquency rates for home loans will keep rising. But FICO says until lenders put the problems in their mortgage portfolios behind them and see sustained growth in employment, the significant gap between credit demand and credit supply is unlikely to close.

State and federal regulators stepped in to close the doors on three community banks this weekend, in Florida, Pennsylvania, and Wisconsin. They bring the number of insured institutions on the FDIC's failed bank list to 149 for the year. By comparison, in all of 2009 there were 140 banks shuttered. First Banking Center in Burlington, Wisconsin, was the largest of this weekend's closings, with $664.8 million in deposits and $750.7 million in assets.

Three community-based lenders were shut down by their regulators over the weekend - two in Georgia and one in Arizona. The number of institutions on the FDIC's failed bank list has hit 146 for the 2010 calendar year. The annual tally has already surpassed the 140 failures seen through the full 12 months of 2009. FDIC Chairman Sheila Bair has said she expects the number of bank collapses to peak in 2010.

The FDIC has approved a proposal that would change the way it determines how much banks pay for the agency's deposit insurance coverage. Since 1935, individual institutions' premiums have been based on the amount of their domestic deposits. The FDIC wants to amend the assessment scheme so that it is based on the bank's assets instead. JPMorgan Chase, Bank of America, and Citigroup could together hand over an estimated $1 billion annually in additional fees under the new structure.

State and federal regulators stepped in to shut down the operations of seven financial institutions over the weekend -- two in Florida, two in Georgia, and one each in Illinois, Kansas, and Arizona. This latest round of closings brings the FDIC's failed-bank tally for the year to 139. In all of 2009, the FDIC counted 140 bank failures. With two months left in 2010, this year is on pace to be the worst for institutional closings since the savings and loan crisis of the early 1990s.

After a short-lived quiet period the weekend before, state and federal regulators stepped in on Friday to shut down the operations of one community-based lender in Kansas and two in Missouri. Together, the three closings are expected to cost the FDIC more than $500 million and bring the 2010 failed-bank tally to 132.