FDIC Girds For Bank Failures

[unhappycamper]

FDIC Girds For Bank Failures
Debora Borchardt
02/26/08 - 04:16 PM EST

Shaky loan portfolios continue to darken the landscape for the nation's banks, as federal regulators prepare for the possibility of an uptick in failures of financial institutions, according to recent government reports.

A record-high $31.3 billion set aside by banks for loan losses, record trading losses and goodwill expenses dragged down fourth-quarter net incomes of insured banks to a 16-year low, according to the Federal Deposit Insurance Corp.'s quarterly banking profile released Tuesday. The cumulative increase to loan-loss provisions was the largest increase in 20 years.

The FDIC report comes on the heels of study from the Government Accountability Office made public last week, which found the FDIC recorded an estimated liability of $124 million at the end of 2007 for the anticipated failure of some insured institutions and also identified potential losses of $1.7 billion should vulnerable insured institutions also fail.

All of this is happening as the FDIC, established during the Great Depression to provide a backstop to depositors during a rash of bank failures, solicits banks' input on ways to accomplish as orderly a wind-down as possible in the event of a major bank's demise. The FDIC sent a notice out to banks requesting their ideas last month.

"The notion that a bank is too big to fail shouldn't be out there," says Jim Marino, of the FDIC's Division of Resolutions and Receiverships.


Rest of article at: http://www.thestreet.com/s/fdic-girds-for-bank-failures/newsanalysis/banking/10405078.html

[gateley]

1. K&R - nt

[CoffeeCat]

2. Am I better off putting my money...

...in my own personal bank---the bank of Sealy Posturpedic?

[RaleighNCDUer]

3. the bank of Sealy Posturpedic?

Wow. High roller, there.

I'm with the Bank of Cookie Jar (with a small account with Cigar Box S&L).

[CoffeeCat]

4. LOL!

The Bank of Cookie Jar, I like that.

This is a funny conversation that begs the serious question...are banks safe? They're FDIC ensured, but then
again, we all know how the government works under BushCo.

Is there an economic hurricane moving toward are banks; and will we all be "FEMA'd" by some "Heckuvajob Brownie"
bureaucrat who will then proceed to say, "Ooops! Sorry about your losses. My bad!"

It's getting scary out there.

[RaleighNCDUer]

5. Exactly. I remember everybody thinking the S& Ls were safe

25 years ago, too. Before BushCo looted them.

Supposedly all accounts are protected up to, what is it, $200,000, but you know the ones that will be protected will the the big boys, and the ones to get 10 cents on the dollar will be Joe and Jane Sixpack.

So you lose $15,000 in the bank collapse? Here's your $15,000 in New Dollars (worth $150).

[phantom power]

6. credit union?

I'm not really clear on the difference between a credit union and other banks, or if they are "safer."