Friday Failures

An interesting development this evening. The FDIC seized nine banks which are all a part of a holding company in Oak Park, Ill. Here is a link to the WSJ article on the demise of these institutions as well as a link to the FDIC website.

There isn’t any mystery about the failure of this mini-empire. All nine grew by plowing money into commercial real estate. The chickens are coming home to roost in this sector and it isn’t going to be pretty. Extend and pretend is just about at the end of the line.

Comments

[Trading Alpha:]

The link leads one to the disclosure the estimated loss to the FDIC will be $2.5b. That is more than 5% of the recently approved three year prepay of FDIC dues. At this pace they will use up the three year pre-pay in about four months. And if the FDIC's loss estimates are low, whcih they probably are, even shorter. We are in deep on this.

Oct 31 08:36 AM

[KirbyJF1:]

This is a Great Deal for U.S. Bank & is a very good way to GROW Deposits & new customers. The thing you fail to comment on is that this is actually a workout plan & the FDIC does not have to put up any cash until there is an actual loss. The loss they project could be more or Less, but will not be fully charged for possibly 10 years.
Tom are you a Short?????????

Kirby

Oct 31 01:51 PM