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Tag Archives: Bank Failure

FDIC Launches Investigation of Officials of Failed Banks

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.

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Bank Risk Managers Say Credit Demand Will Rise Faster Than Supply

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.

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Three More Community-Based Lenders Closed by Regulators

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.

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Regulators Shut Down Georgia and Arizona Banks

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.

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FDIC Proposes New Fee Structure Based on Banks’ Assets

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.

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Regulators Close the Doors on Seven Community-Based Lenders

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.

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Regulators Shut Down Three Midwest Lenders

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.

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Mortgage-Related Casualties Tally 49 for the Third Quarter: Report

During the third quarter, 49 mortgage-related companies went under or closed down part of their operations, according to industry data released Tuesday. Organizational shake-ups were felt at even the nation's largest lenders. One top-four bank put the brakes on its subprime lending business, while the country's No. 1 lender abandoned mortgage broker originations. As of the end of September, industry casualties for the year tallied 158. However, overall mortgage-related failures this year are on track to subside from 2009.

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Treasury Secretary Geithner Challenges Myths About TARP

The federal government's Troubled Asset Relief Program (TARP) officially hit its expiration date last week. For the past two years, the controversial $700 billion bailout package has drawn the ire of critics from nearly every corner. In an op-ed piece, Treasury Secretary Timothy Geithner sets out to dispel what he says are the five most popular myths surrounding TARP, including the cost to taxpayers and the idea that it was a carefully wrapped gift for Wall Street.

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Regulators Close Operations of Florida and Washington Banks

State and federal regulators closed the doors on two community banks over the weekend - Wakulla Bank in Crawfordville, Florida, and Shoreline Bank in Shoreline, Washington. The two lenders' closings bring the number of names on the FDIC's failed-bank list to 129 so far for the 2010 calendar year. The real estate and financial crises have been dire for the nation's banking system. Some analysts have estimated that the United States could lose as much as a third of its banks when all is said and done.

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