Infinite Unknown

Son of presidential nominee John McCain was reportedly former board member; closing marks the 11th bank failure this year.

WASHINGTON (AP) — Regulators on Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development.

It was the 11th failure this year of a federally insured bank.

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Tags: Bank, bank failure, Credit Crisis, credit crunch, Economy, FDIC, Government, IndyMac, John McCain, mortgage crisis, Mortgages, U.S.

By John Browne, senior market advisor - Euro Pacific Capital

As we enter the height of the hurricane season, it may be worthwhile to recall, when considering the economy at large, the particular deception that lurks in the “eye” of the storm. After a raging tempest, the sudden appearance of the calm ‘eye’ can all too easily encourage people to leave their shelter in order to assess and even repair damage, exposing themselves to the often more devastating second leg of the hurricane.

We have long warned our readers of a coming real estate crash which would then lead to a credit crunch, and eventually a major round of bank failures. We have argued that these developments would be the precursors to a major recession, and perhaps a depression.

As predicted, the collapsing values of bonds backed by subprime mortgages did indeed lead to a collapse of the entire mortgage market, a bank liquidity crisis, a credit crunch and a steep fall in consumer confidence. This was the first leg of the storm, but the full blown banking collapse and the deep recession are not yet manifest. The conventional wisdom holds that the bullet has been dodged.

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Tags: Bank, bank failure, Credit Crisis, credit crunch, Dollar, Economy, FDIC, Fed, Federal Reserve, Government, mortgage crisis, Mortgages, Recession, Stock Market, U.S.

Aug. 29 (Bloomberg) – Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression.

Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp. Regions Financial Corp., Alabama’s biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank’s five offices will open on Sept. 2 as branches of Regions, the FDIC said.

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Tags: Bank, bank failure, Credit Crisis, Economy, FDIC, mortgage crisis, Mortgages, U.S.

U.S. and European banks, already burdened by losses and concerns about their financial health, face a new challenge: paying off hundreds of billions of dollars of debt coming due.

At issue are so-called floating-rate notes - securities used heavily by banks in 2006 to borrow money. A big chunk of those notes, which typically mature in two years, will come due over the next year or so, at a time when banks are struggling to raise fresh funds. That’s forcing banks to sell assets, compete heavily for deposits and issue expensive new debt.

The crunch will begin next month, when some $95 billion in floating-rate notes mature. J.P. Morgan Chase & Co. analyst Alex Roever estimates that financial institutions will have to pay off at least $787 billion in floating-rate notes and other medium-term obligations before the end of 2009. That’s about 43 percent more than they had to redeem in the previous 16 months.

The problem highlights how the pain of the credit crunch, now entering its second year, won’t end soon for banks or the broader economy. The Federal Deposit Insurance Corp. said on Tuesday that its list of “problem” banks at risk of failure had grown to 117 at the end of June, up from 90 at the end of March. FDIC Chairman Sheila Bair said her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. She said the borrowing could be needed to handle short-term cash-flow pressure brought on by reimbursements to depositors after bank failures.

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Tags: Bank, bank failure, Citigroup, Credit Crisis, credit crunch, debt, ECB, Economy, FDIC, Fed, Federal Reserve, Government, JPMorgan, Merrill Lynch, Morgan Stanley, mortgage crisis, Mortgages, Stock Market, Treasuy, U.S., UBS, Wachovia, Wall Street, Wall Street Journal

(Reuters) - Federal Deposit Insurance Corp (FDIC) might have to borrow money from the Treasury Department to see it through an expected wave of bank failures, the Wall Street Journal reported.

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Tags: Bank, bank failure, Credit Crisis, Economy, FDIC, Government, mortgage crisis, Stock Market, Treasury, U.S., Wall Street, Wall Street Journal

Regulator, insurer boosts its staff and provisions as it faces its biggest challenge in decades

ATLANTA - The Federal Deposit Insurance Corp. is one of those agencies with a low profile but essential role similar to plumbing or electricity - you don’t notice it until the power’s out or the basement’s flooding.

These days, the FDIC’s folks are busier with the financial equivalent of fixing burst water mains and dead power lines.

Seventy-five years after it was launched during the Great Depression, the bank regulator and insurer is facing its biggest challenge in decades. Many banks in Georgia and across the nation have been battered by the slumping economy and troubled loans to home builders, developers and homeowners.

Hundreds could fail, some industry experts predict. That could force the agency to make good on its promise to insure most customers’ checking and savings deposits up to $100,000 and some retirement accounts up to $250,000, putting pressure on its insurance fund.

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Tags: Bank, bank failure, Credit Crisis, credit crunch, Economy, FDIC, Great Depression, U.S., Wall Street

Aug. 23 (Bloomberg) — Columbian Bank and Trust Co. of Topeka, Kansas, was closed by U.S. regulators, the nation’s ninth bank to collapse this year amid bad real-estate loans and writedowns stemming from a drop in home prices.

The bank, with $752 million in assets and $622 million in total deposits, was shuttered by the Kansas state bank commissioner’s office and the Federal Deposit Insurance Corp., the FDIC said yesterday in a statement.

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Tags: Bank, bank failure, Economy, FDIC, mortgage crisis, Mortgages, U.S.

Aug. 22 (Bloomberg) — Fannie Mae and Freddie Mac, the two largest mortgage finance companies, “don’t have any net worth,” billionaire investor Warren Buffett said.

“The game is over” as independent companies said Buffett, the 77-year-old chairman of Berkshire Hathaway Inc., in an interview on CNBC today. “They were able to borrow without any of the normal restraints. They had a blank check from the federal government.”

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Tags: Alan Greenspan, bailout, Bank, bank failure, Bear Stearns, Bill Gates, China, Economy, Fannie Mae, Fed, Federal Reserve, Franklin Delano Roosevelt, Freddie Mac, Government, Henry Paulson, Inflation, JPMorgan, mortgage crisis, Mortgages, Treasury, U.S., Warren Buffet

SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world’s biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

“The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say ‘the worst is to come’,” he told a financial conference.

“We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks,” said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund’s chief economist from 2001 to 2004.

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Tags: Bank, bank failure, Citigroup, Economy, Fannie Mae, Fed, Federal Reserve, financial crisis, financial system, Freddie Mac, Government, IMF, Inflation, Merrill Lynch, mortgage crisis, Mortgages, U.S.

NEW YORK, Aug 3 (Reuters) - The United States is in the second inning of a recession that will last for at least 18 months and help kill off hundreds of banks, influential economist and New York University Professor Nouriel Roubini told Barron’s in Sunday’s edition.

Taxpayers will pay a big price for helping bail out the rest of the financial services industry as well, Roubini said — at least $1 trillion and more likely $2 trillion.

The banks will become insolvent because of mounting losses as a result of the housing bust and because they have only written down their subprime loans so far, he said. Still in front of them are their consumer-credit losses, for which they lack the reserves, Barron’s reported.

He also said there are hundreds of millions of dollars outstanding in home-equity loans that could be worth zero, too.

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Tags: bailout, Bank, bank failure, bankruptcy, Economy, Fannie Mae, Fed, Federal Reserve, financial crisis, Freddie Mac, Government, mortgage crisis, Mortgages, Nouriel Roubini, taxpayers, Treasury, U.S., Wall Street