Chewing on the FDIC List of 'Problem' Banks 20 comments
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I was recently called out on missing the details of the FDIC's list of 117 'problem' banks. In a post on the OTS' agreement for regulatory supervision of Washington Mutual (WM), I incorrectly stated that National City (NCC) was on that list and inferred that WaMu was as well. This is not the case. The total asset base of the banks on that list is only $78 billion combined. The FDIC won't say which banks are in its problem list. However, based on the total assets of these institutions, we know which banks are NOT on the list. The total assets is $78 billion with $32 billion coming from IndyMac Bank which failed in July. That leaves $46 billion for the other problem banks. Below are banks that can't be on the list since their assets are over $46 billion. However, it should be noted that IndyMac failed and it was not on the problem list at the end of the first quarter.
Both NCC and WaMu have more assets alone than that entire list. So, this was clearly an error on my part and I freely admit it.
However, this does give me the opportunity to cite the blog "Bank Deals" which has enumerated which troubled banks in particular could not be on the FDIC's watch list.
The following banks are under $46 billion in assets, however, with a total of 117 banks on the problem list, there are probably not too many banks with assets between $10 to $20 billion on the list.
Sorry for this factual error.
Other sources: Problem banks: What you need to know - CNN Money
Disclosure: I have no financial stake in any financial institution mentioned in this post.
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This article has 20 comments:
As one commentor said in response to your original post, the key would rest in whether or not you believe the data being provided by the government (for starters).
More telling is your statement above that "it should be noted that IndyMac failed and it was not on the problem list at the end of the first quarter". I'd be willing to assume that's correct, although I don't know.
And ANY data you're looking at most certainly doesn't consider the total collapse in value of all FNM and FRE preferred and common stock, or the change in Lehman's situation yesterday.
We're in a highly fluid situation here, where information that is more than 24 hours old or so, probably shouldn't be relied upon for making investment decisions.
Buy some gold, if you can find any. That's all I'll say.
:)
It really says something that the list is this long and doesn't include WaMu, which is so clearly on the brink and with credit default swaps indicating a huge chance of a near-term insolvency.
Banks are run by professionals. When they screw up and lose money, that is called malpractice and these professionals need to be held accountable for their bad judgment.
What is really hard to accept are all the apologists out there who make excuses for criminal behavior. When bank CEO's are held accountable for losing a great deal of money, these problems will cease to exist.
Clark Jenkins
FishGoneBad.com
thanks
Furthermore, most publically traded bank stocks are actually bank holding companies. A bank holding company can own multiple FDIC banks and each subsidiary bank submits a separate quarterly report.
For example, WaMu is a bank holding company that owns two individual FDIC insured thrifts - one headquarted in Nevada and one in Utah. Each thrift submits a separate report and the assets of the Utah subsidiary are small enough to be included on the problem list. (Although it's probably not on the list- the Utah subsidiary is highly solvent according to Bankrate.)
The bottom line - you can't really rely on the FDIC problem list to evaluate the solvency of publically traded bank stocks.
It just doesn't sound right or nice. A good nickname
is very important for success.
I'm late to this thread, but it appears that CORS will be taken over soon, based on the financial performance during the 2nd quarter which left the bank with a negative Tier One capital of <$2.1 million>, and a 'critically undercapitalized' rating by the FDIC.
I'm frankly surprised that the bank has remained open this month.