Bank Failure List

[MountainMeg]

08/06/2010 - Only one bank this week with 2 branches.  Ravenswood Bank in Chicago IL.

[Mike]

Thanks!

2 banks.

I suppose it is a little premature to party?!

[Atash Hagmahani]

Yes, because commercial loan rollovers don't peak until 2012.

[MountainMeg]

08/14/2010 - One bank in Illinois with a total of 5 branches.  Total banks for the year 110.

[MountainMeg]

WOW - Heck of a week this week.

According to the FDIC bank closure list 8 banks bit the dust with a combined branch total of 61 branches!

Interestingly, the AP reports only 4 closures and there's some weird stuff about Shorebank with 15 branches.  There appear to be some interesting ties to the current administration, which figures since the bank is Chicago based.

In an unusual move, the FDIC allowed some of ShoreBank's executives to continue running the restructured bank. Executives who joined ShoreBank recently, as the bank struggled to raise capital, will manage Urban Partnership Bank. These managers "did not contribute to the bank's problems," the FDIC said.

ShoreBank lost $39.5 million in the second quarter amid soured real estate loans. The bank had been under a so-called "cease and desist" order from the FDIC for more than a year, requiring it to boost its capital reserves. ShoreBank was able to raise more than $146 million in capital this spring from several big Wall Street institutions. It was unable, however, to secure federal bailout funds it sought from the Troubled Asset Relief Program.

ShoreBank had indirect ties to a few members of the Obama administration -- one of them, presidential adviser Valerie Jarrett, was on the board of a Chicago civic organization led by a ShoreBank director -- and powerful supporters, including former top federal banking regulators Ellen Seidman and Eugene Ludwig.

House Republicans launched an inquiry this spring into whether the administration intervened to help shepherd a bailout of ShoreBank. Rep. Darrell Issa of California, the senior Republican on the House Oversight and Government Reform Committee, sent a letter to a White House legal adviser asking specific questions on possible contacts between administration officials and executives of ShoreBank or potential investors.

[Atash Hagmahani]

Interesting. I don't see any pattern. I wonder if it's being determined by a bureaucratic schedule. "Let's see, we'll be in Chicago next week, time to take care of some business there...".

Looks like AP updated its story to get the right count...

http://finance.yahoo.com/news/Regulators-shut-down-big-apf-496139063.html?x=0&sec=topStories&pos=1&asset=&ccode=

WASHINGTON (AP) -- Regulators on Friday shut down a big community bank based in Chicago that has been known for its social activism but racked by financial troubles in recent months. A consortium funded by several of the biggest U.S. financial firms is buying its assets and pledging to operate the new bank by the same principles.
...
ShoreBank lost $39.5 million in the second quarter amid soured real estate loans. The bank had been under a so-called cease and desist order from the FDIC for more than a year, requiring it to boost its capital reserves. ShoreBank was able to raise more than $146 million in capital this spring from several big Wall Street institutions. It was unable, however, to secure federal bailout funds it sought from the Treasury Department's Troubled Asset Relief Program.

Investors in Urban Partnership Bank read like an all-star roster of U.S. finance, including American Express Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., GE Capital Equity Investments Inc., Morgan Stanley, Northern Trust Corp. and Wells Fargo & Co. The Ford Foundation and the MacArthur Foundation also are investors.

ShoreBank was founded in 1973 with the aid of several dozen institutional backers. The bank has been known for promoting redevelopment, minority business and environmentally responsible lending, and serving low- and moderate-income neighborhoods in Chicago. It was the nation's first community development and environmental bank, branching out from its roots on Chicago's South side to Cleveland, Detroit, the Pacific Northwest and 40 foreign countries.

ShoreBank had indirect ties to a few members of the Obama administration -- one of them, presidential adviser Valerie Jarrett, was on the board of a Chicago civic organization led by a ShoreBank director -- and powerful supporters, including former top federal banking regulators Ellen Seidman and Eugene Ludwig.

Someone I know--not related to, don't blame me--used to be involved in a racket in Chicago (I think these are actually fairly common, but especially so in Chicago), whereby they would buy up tenements in really bad shape for very low prices, hire black market labor to do the most superficial cosmetic repairs they could, bribe building inspectors to declare them up to code, and bribe city elected officials to discover a compelling public interest in buying up the "public housing".

The principals would make a fortune in extremely over-priced goods socked to the taxpayer.

I've seen similar rackets going on in Seattle.

This "community activist bank" sounds suspiciously like the type of institution that would partner in these types of rackets.

[hancocs]

http://www.activistpost.com/2010/08/failure-of-obamas-pet-shorebank-costs.html#more

http://www.bloomberg.com/news/2010-08-21/shorebank-of-chicago-seven-others-shuttered-as-2010-failures-climb-to-118.html

A little bit more on ShoreBank.

[MountainMeg]

8/27 - No bank failures listed for this week.  Guess FDIC is still digesting last weeks grand sweep.

[Mike]

A junket to Jackson Hole wouldn't interfere with taking over banks, would it?

[Dame]

Civil servants, media and the financial community tend to take vacation leave in August.  The three people left would likely not by looking for work to do.

[MountainMeg]

No banks added to the list for 09/03/10.  It's a holiday weekend and Dame's probably right about August vacations.

[MountainMeg]

09/10/2010 - Horizon Bank of Florida fell.

According to Urban Survival, that makes 119 banks with a total of 999 branches for the year.

[Atash Hagmahani]

Interesting that the pace is still so slow this late in the game. Are we going to have a surge next year, or does a major change to the system change the situation?

[Mike]

Interesting that the pace is still so slow this late in the game. Are we going to have a surge next year, or does a major change to the system change the situation?

Something has been bothering me lately, & Atash put his finger on it. 

I don't know.

Here is a story on Bank #119, Horizon Bank
http://www.heraldtribune.com/article/20100911/ARTICLE/9111038/2055/NEWS?p=1&tc=pg

...
Despite turning a $123,000 profit in the second quarter, the 11-year-old Horizon remained critically undercapitalized.
...
Horizon showed some of the weakest numbers among its peer group, especially for nonearning loans and capital, said Florida bank expert Ken Thomas.

"They are woefully undercapitalized," Thomas said. "This is the main thing regulators watch."

The failure will cost the FDIC $58.9 million.
....

So the #1 reason for a Bank Closure is 'insufficient reserves.'
#2 is 'non earning loans.

The #1 reason for not closing a bank would be 'interfering with vacation.'
#2 might be that the 'FDIC is low on funds.'

Remember?  Didn't the FDIC ask member banks to pay their premiums three years in advance?  It seems to me they did.

[Atash Hagmahani]

Now you're scaring me, Bud. Meg, do you happen to know how much money that Congress "loaned" the FDIC is left?