FDIC Troubled Bank List up to 252

That headline is very deceiving - let's be very clear here on reality versus good PR.

Flashback to August 2008 [Aug 26, 2008: FDIC Troubled Bank List]

...every quarter the FDIC updates its problem list; I'm on record saying when we look back in 12, 18, 24 months we'll see a slew of bank failures, many of which are names we've never heard of. At some point the FDIC will run out of money to guarantee the $100K per account so they will have to raise the fees on the remaining banks to raise more money to fund their bailout fund. Which is sort of circular when you think about it.

So far other than Indymac its been smaller names, but just looking at this Washington Mutual (WM) it seems almost apparent that our largest savings and loan will go at some point. As for FDIC insurance it is down to $45.2B from $52.8B just from 1 large failure (IndyMac)

So back in August we "only" had 117 troubled banks (up from 90) and assets in those banks went from $26 Billion to $46 Billion (ex IndyMac) - but nowhere on that list the quarter earlier (when we had 90 troubled bank) was IndyMac - which was the 2nd biggest failure in history ... at the time. Nor in August did we have Washington Mutual (which we had to take over and give to JPMorgan), nor Wachovia (which we had to take over and give to Wells Fargo). Nor did we have Citigroup (C) or Bank of America (BAC) both of which are alive only through largess of US taxpayer.

Then we moved on to November 2008 [Nov 25, 2008: FDIC Troubled Bank List Grows 46% - Is Your Bank Safe?]

As I wrote recently, I don't see much value in the FDIC Troubled Bank List considering two quarters ago it was missing IndyMac Bank - which went on to the largest bank failure at that time, and then last quarter [Aug 26: FDIC "Troubled Bank" List] it missed Washington Mutual (WM) which was the largest S&L in the USA, and effectively failed. Further, this list does not have Citigroup (C) which is being supported by the US taxpayer. So this whole list is measurably suspect. However, the one point of use is in the pace of degradation... granted its from one bad data set to another bad data set but we now have a 46% increase quarter over quarter.

Again, please don't worry - if we cannot raise fees on banks to pay for their own failures, we always have your grandchildren's fund aka the Great Printing Press. Helicopter Ben stands at the ready. Look for the FDIC to borrow from the US Treasury for insurance funds by this time next year.

So we went from 117 to 171 banks and assets in said banks up to $115 Billion. Just that number alone STILL showed none of the major banks were on the list. Because they're "just fine" (as the stress test will soon show you)

FDIC deposit insurance? Down from $45.2B to $35.6B.

Let's see where we are today....

via Bloomberg

• The U.S. banking industry posted its first loss since the savings-and-loan crisis in the fourth quarter, and industry earnings last year were the lowest in 18 years, the Federal Deposit Insurance Corp. said.
• Institutions on the agency’s “problem list” rose 47 percent to 252 lenders in the quarter ended Dec. 31 from 171 in the preceding quarter, the Washington-based agency said today in its quarterly report on the industry’s health.
• “Rising loan-loss provisions, losses from trading activities and goodwill writedowns all contributed to the quarterly net loss as banks continue to repair their balance sheets in order to return to profitability in future periods,” the FDIC said in a news release.
• Lenders on the FDIC’s “problem list” had assets of $159 billion at the end of the fourth quarter, an increase from the $116 billion at the end of the third quarter, the agency said.

So they "say" 252 banks and $159 billion... so of course with that paltry number Bank of America and Citigroup are STILL NOT troubled banks (hold on, have to stop laughing... can't type) - as you know those bankes are just fine.

On the "positive" side FDIC reserves, which had fallen to $18.9 Billion in middle of fourth quarter has jumped to $69.3 Billion due to a doubling of premiums the banks have to pay <--- as I predicted would happen in August

• Funds set aside by banks to cover loan losses more than doubled to $69.3 billion in the fourth quarter from $32.1 billion in the year-earlier quarter. The FDIC has doubled premiums it charges banks to replenish its reserves, which were slashed in half to $18.9 billion in the fourth quarter from $34.6 billion the previous quarter as bank failures reached a 15-year high last year.

Now if you think real hard... considering all the major (and many minor) banks received $350B+ of TARP money.... whose pockets did these premiums come out of? You guessed it.

And once more.... say thank you to your grandchildren.

Just charge it on my TARP VISA!

Comments

[Bingo 2:]

I would be nice if the author would cut the bull and publish the "list" of the banks. His commentary is worthless without specifics.

Feb 27 02:25 PM

[PainfullyAware:]

The Charade Of Solvency Continues.

When the "Financial Engineering" is cleared from the system things will begin to resemble normalcy.

Feb 27 02:31 PM

[PainfullyAware:]

On Feb 27 02:25 PM Bingo 2 wrote:

> I would be nice if the author would cut the bull and publish the
> "list" of the banks. His commentary is worthless without specifics.

The FDIC guards that information with a vengeance. If you become a Certified Private Equity Bidder with them they will let you see it, so that you can begin Due Diligence for the purchase of the listed banks should they be closed.

It is apparent by your comment that you have not looked with much scrutiny at this subject nor attempted to pursue a position as bidder.

All, but a select few, will remain in the dark on these dealing until the press release of FDIC take over.

Feb 27 02:38 PM

[hwood007:]

your point is well made; however, if a thing is secret and we can not speak of it, then why bother writing an article about it??? So the point of why write about a list you can not print is also valid!!!


On Feb 27 02:38 PM PainfullyAware wrote:

> On Feb 27 02:25 PM Bingo 2 wrote:

Feb 27 04:02 PM

[TraderMark:]

there is value in seeing aggregate issues - even if we don't have specific names. As another reader said above we can't see who is on the list, because that would cause bank runs and thats how you go from "troubled" to "dead" as a bank.

The point of the article was to show that many of the banks the US govt has infused money into or "pushed" into shotgun marriages were not even on the list a quarter earlier. So the list today is understating. Especially without Citi and Bank of America.

I notice some people are in bad moods lately in comments :)

Feb 27 04:09 PM

[Fish Gone Bad:]

You can create a bank list from thestreet.com's site.:
www.thestreet.com/scre...

Clark Jenkins
FishGoneBad.com

Feb 27 05:35 PM

[PainfullyAware:]

It is a State of the Banking Industry Article; Not a Who's Going Down In Flames article.

As a Metaphor: Why discuss the wind - you can not see it. However you can see its effects on the trees.

Knowledge Can Be Gained From Unlikely Sources Not Easily Correlated.



On Feb 27 04:02 PM hwood007 wrote:

> your point is well made; however, if a thing is secret and we can
> not speak of it, then why bother writing an article about it??? So
> the point of why write about a list you can not print is also valid!!!
>

Feb 27 07:27 PM