Posts Tagged ‘u.s. banking crisis’

U.S. Banking Crisis Accelerates: FDIC Bank Closures Well Ahead of Last Year

August 2nd, 2010 Comments off

The FDIC once again did its Friday Night below-the-radar exercise; shutting down insolvent banks while Americans and their news media were in low gear or distracted. This time, five more banks were shuttered, while the U.S. media overdosed on coverage of the wedding of the daughter of former president Bill Clinton.

With the FDIC closing of 5 banks in Oregon, Washington,  Florida and Georgia, the total for the first 7 months of 2010 stands at 108 failed institutions. This compares with a mere 69 at the same point last year. And 2009 was supposedly one of the worst years ever for bank closings in the United States since the Great Depression of the 1930s.

Despite claims by U.S. economic policymakers that the American banking crisis was “cured” by the U.S. Treasury and Federal Reserve bailouts of the nation’s financial industry, there is no doubt that FDIC bank closings will set a record in 2010, eclipsing the already dismal figures for 2009.

In my book, “Global Economic Forecast 2010-2015: Recession Into Depression,”  I project a severe deterioration in the U.S. banking sector during the latter part of 2011. The accelerating pace of FDIC bank closings, combined with the  continuing global economic crisis and  indications of a double dip recession, would seem to provide growing validation of my prediction.

U.S. Banking Crisis Worsens Amid More FDIC Bank Closures

June 27th, 2010 Comments off

In 2009 the United States experienced its worst year for bank closures since 1992. It now looks like 2010 will be an even more critical year for U.S. banks, with the FDIC on pace to exceed the 2009 record of 140 banks closed. With three more banks shut down by the FDIC after the Friday news cycle slowed for the weekend ( the customary bank shut down procedure for the FDIC), the total number of bank failures for 2010 already stands at 86.

Why are so many U.S. banks being closed after the U.S. Treasury Department’s vaunted bank stress test last spring declared America’s financial institutions to be healthy and well capitalized? Because, as I stated in my blog comment at the time, the so-called banking stress tests were a complete charade. In reality, much of America’s banking and financial system is virtually insolvent, and about to face an implosion in commercial real estate valuations polluting its balance sheets, along with the asset erosion that will be worsened by the pending double dip recession.

The global economic and financial crisis is far from over. The next phase in the deteriorating banking crisis in America, the UK and Eurozone points to a global recession morphing into a worldwide depression.

FDIC Begins 2010 With More Bank Closures

January 24th, 2010 Comments off

It is the third week of January, 2010 and the FDIC has already shut down 9 insolvent banks. True to form, these bank closures are typically announced on Friday nights, with the expectation that the weekend will allow only limited news coverage. Nevertheless, this attempt by the FDIC to manage the news and limit media exposure cannot disguise the fact that the American banking system enters 2010 in a state of acute fragility.

The seventh bank of 2010 to be shuttered was the Charter Bank in Santa Fe, the first bank in New Mexico to be closed in more than 10 years. Other bank closings occurred in Oregon, Washington, Florida, Missouri and Minnesota. All in all, not an auspicious beginning to 2010, the year that the Obama administration predicted would show strong economic growth and the emergence of the U.S. from recession and job losses.

U.S. Banking Crisis: American Bank Losses Continue

January 21st, 2010 Comments off

With TARP, the Federal Reserve discount window and FASB rule changes that allow inflated valuations of toxic assets sitting on bank balance sheets, it takes a real act of heroism for an American bank to post a quarterly loss. However, in the last quarter of 2009 two banks from the U.S. government’s list of “too big to fail” institutions earned that dubious distinction. Bank of America posted a Q4 loss of $5.2 billion, while Citigroup lost $7.6 billion.

Both banks had their own list of excuses and spin to explain the red ink, including in the case of Bank of America the paying back of its TARP funds (a decision which seemed motivated by the primary purpose of removing government restraints on executive compensation and bonuses). Nevertheless, these numbers, glaringly bad despite unprecedented taxpayer assistance and accounting rule modifications designed to manufacture profitability out of thin air, are a clear reminder than in truth, much of the U.S. banking system remains mired in deep crisis, and confronting functional insolvency.