Texas Ratios for 8,196 Banks Equals 95 Bank Failures and $21.9 Billion in Bailouts?

A lot of noise is being heard about the Texas Ratio as a proxy for bank health. Without knowing what is in a banks books and how those assets are going to perform who really knows. I took the +8,000 US bank data set provided by lewrockwell.com (Caveat emptor) and created a tool.

There has been a noted lull in the FDIC Friday night bankruptcy game as of late. It may pick up after January 21st about the time the auto bailout is spent and the inauguration is winding down, coincidence?

If one assumes a Texas Ratio of 100 leads to trouble and that there is a 25% loss on assets in those 95 of troubled banks, then we are in for another $21.9 billion in net bailout fun. Again all of this is pure speculation. I just thought I would organize the data and provide a tool for people to check out troubled banks and the potential impacts more easily.

In a period of extreme uncertainty and volatility in the cost of money, the assumption of underlying asset values and the marked valuation of those assets, banking can be considered an interesting sport these days.

So feel free to play around with the ole TexasBankorometer. Happy 2009. Download Bankstexasratiov1.1

Anybody have an interesting data set to play with send me an e-mail. I like to build models.

Comments

[User 354142:]

What date was this data from? I assume it is Sept 2008. Is this right.

Feb 10 12:25 AM