PPY's  Instablog

Dear Most MSM In America: why are you allowing Ms. Sheila Bair to destroy this country by not covering her disastrous missteps as the head of the FDIC, Congressional mandated guardian for the life savings of all taxpayers, even the poorest ones?

No wonder they say love is blind, and beauty is in the eye of the beholder.

                                   
     Jamie and Sheila                                         Tiger and Elin
(Both happily married; but
we know FDIC loves JPM)


  GOOD-BYE BANKS                                 GOOD-BYE LADIES
       FDIC Sales:                                        Rumored Mistresses:
   No Transparency/                                       Transparency/             
         No Trend                                         Cocktail Waitress Trend 
   
                                         
   Latest Puget article                                              Rachel
  reported Wamu was
solvent and had lots of
cash, contrary to FDIC
   "liquidity pressure"
   reason for seizure;
  sold to JPM for $1.9
   billion; FDIC TLGP 
guarantee for JPM~$40
   billion; bondholders
   wiped out; ~10,000
    employess laid off                                                                  

                                         
     Expedited death                                                Jaimee    
  by FDIC's decision to 
      wipe out Wamu
 bondholders; originally
  forced by Ms. Bair to 
     sell itself over a
   weekend for $1 per
    share to Citigroup
 even though FDIC was
not the primary regulator
        for WFC or C
  (FDIC picked the very 
  same C that ended up
  receiving and has yet
paid back $50 billion TARP
money, $35 billion via TLGP
from FDIC, and over $300
billion in asset guarantee
    from government)
      
                                                
"Flowers' Higher Bid for                                           Kalika
  BankUnited Assets                                                   
 Lost to Kansas Group...                                 
[instead] the two sides
[FDIC/ Kansas Group]
ageed to share losses
   on $10.7 billion of                                 
      of assets;" not 
   least cost solution
          for FDIC                                   
www.bloomberg.com/apps/news?pid=20601087...
                                             
                                                     
    A clear example of                                               Jamie     
   regulatory failure at
prompt corrective action;                                   
delayed seizure by FDIC                                  AND COUNTING...                            
 despite a self-reported
  negative core capital 
 ratio; Guaranty Bank
       sold to foregin 
BBVA with FDIC entering
a $9.7 billion loss sharing
          agreement                                                                     
market-ticker.denninger.net/archives/128...
money.cnn.com/2009/09/24/news/companies/...
                                                                                                           
                                        
  Shocked by sudden and
    earlier than expected
  seizure in April; cost to
          FDIC ($191.2                              
  million) could have been
avoided had OTS and FDIC
     not ignored their own
    June 30, 2009 deadline
given to First Bank of Idaho
     management to raise
               capital
www.fdic.gov/news/news/press/2009/pr0906...
www.idahostatesman.com/business/story/76...

   
FBOP failed because of
 its heavy investment in
 FNM/FRE, not reckless
 or corrupt management
   practices; originally
promised TARP assistance
but due to rule change was
no longer eligible; funding in
place but proposal "has not
   been approved;" all 9
     banks sold to USB,
including two that did not fail,
because FDIC favored to sell
the whole franchise; USB now,
however, plans to break FBOP
  up and sell its three Texas
     banks; "Park National
     Bank didn't fail.  It was
    ambushed... the FDIC is
handing over to another bank a
reported $2.5 billion to take on
    Park National's assets."
www.wednesdayjournalonline.com/main.asp?...
http://archives.chicagotribune.com/2009/nov/03/business/chi-tue-fbop-nov03
http://www.fdic.gov/news/news/press/2009/pr09195.html
archives.chicagotribune.com/2009/oct/29/...
milwaukee.bizjournals.com/milwaukee/stor...

   
"New investments topped the
 $27 million [needed by San
Joaquin Bank to avoid failure]
mark that Friday afternoon" but
was seized and sold anyways,
   wasting FDIC $103 million;
"Shutting down a successful local
business bank does not strike me
as being in our community's best
interest. It is all the more puzzling
because the bank, in a heroic effort,
raised the capital needed to meet
  the FDIC's formula for liquidity."
http://www.finreg21.com/news/san-joaquin-banks-final-hours-bank-earlier-campaign-might-have-made-difference-0
http://www.fdic.gov/news/news/press/2009/pr09185.html
bakersfield.com/opinion/letters/x2990760...

  
  "U.S. regulators blocked
      the Chinese bank
  Minsheng from acquiring
    United Commercial
 Bank in a deal that could
 have saved $1.7 billion in
   taxpayers' money and
insurance;" instead FDIC sold
  UCBH to another TARP
recipient East West Bancorp
 (who has yet paid back its
  own $300 million TARP 
money) and agreed to share
  losses on $7.7 billion of
               assets
www.reuters.com/article/rbssFinancialSer...
www.marketwatch.com/story/anointed-by-fd...
bailout.propublica.org/entities/146-east...
bailout.propublica.org/programs/1-capita...

AND COUNTING...


It took National Enquirer and TMZ to uncover Tiger's " transgressions."

Would it also take these tabloid news agencies, instead of the highly respected New York Times and Wall Street Journal, to reveal and discuss in detail the numerous mistakes made and unfair actions taken by our FDIC chairwoman, Ms. Sheila Bair?

At least Tiger issued an apology for allegedly cheating on his wife.

When does Ms. Bair plan to issue hers for:

1. underestimating the severity of the financial meltdown while blasting Bloomberg for trying to warn her about the inadequacy of her insurance reserve last September, before the economic crisis was in full gear;

---"Bloomberg reporter David Evans' piece ("FDIC May Need $150 Billion Bailout as Local Bank Failures Mount," Sept. 25) does a serious disservice to your organization and your readers by painting a skewed picture of the FDIC insurance fund. Let me be clear: The insurance fund is in a strong financial position to weather a significant upsurge in bank failures."
www.fdic.gov/news/news/press/2008/pr0808...

2. seizing and selling Wamu when it was neither insolvent nor illiquid (translation= bank robbery made legal, even from pension funds);

---"Now, further investigation reveals that, contrary to regulators’ assertions at the time of the seizure, WaMu had sufficient liquidity and capital to meet regulatory standards and survive."
seattle.bizjournals.com/seattle/stories/...
---"The Washington State Investment Board's funds will lose about $47 million because of the failure of Washington Mutual, state officials tell KIRO 7 Eyewitness News."
cftlaw.com/news.php?category=Insurance+I...
"At least seven pension funds lost their private equity investments in Washington Mutual, following its failure and subsequent purchase by JPMorgan Chase... Investors in the $19.8 billion TPG VI include CalPERS, New York State Common Retirement Fund, Illinois Teachers' Retirement System, Washington State Investment Board, Los Angeles City Employees Retirement System and the San Francisco City & County Retirement System."
www.pionline.com/article/20080929/PRINTS...

3. foolishly picking an "on-the-verge-of-collapsing" Citigroup to "rescue" Wachovia;

---"Citi will acquire 'the bulk of Wachovia's assets and liabilities,' the FDIC statement said. Under the agreement, Citigroup will absorb up to $42 billion of losses on a $312 billion pool of loans, while the FDIC will take losses beyond that. Citigroup has granted the FDIC $12 billion in preferred stock and warrants to compensate the FDIC for bearing the risk"
www.marketwatch.com/story/citigroup-to-b...
"The head of the FDIC said the agency is standing behind the agreement it made with Citigroup Inc. to buy Wachovia Corp. despite Wells Fargo & Co.'s new $15.1 billion deal trumping Citigroup's plan."
www.nydailynews.com/money/2008/10/03/200...
---"U.S. Agrees to Rescue Struggling Citigroup... Plan Injects $20 Billion in Fresh Capital, Guarantees $306 Billion in Toxic Assets"
online.wsj.com/article/SB122747680752551...

4. destroying the credit and bond markets by seizing Wamu based on liquidity pressure and wiping out Wamu bondholders in an unprecedented move, respectively;

---"The amounts deposited with the ECB rise from a daily average of 0.09 billion euros in the week starting September 1, 2008 to a daily average of 169.41 billion in the week of September 29, 2008... The amounts deposited with the ECB start rising after the collapse of Washington Mutual when the crisis spreads outside the investment banking realm."
www.newyorkfed.org/research/conference/2...

---

"This is a chart of the excess reserves held at the U.S. central bank.  The chart, compiled by the St. Luis Fed demonstrates that banks always lend out nearly every dime they can so as to make a profit.  They do not hold excess reserves at the Fed, sitting around making them no money.

But, notice how the blue line is flat near zero and then it spikes up to ridiculous levels close to $300 billion in 2008.  With our reserve ratio of 10%, that's nearly $3 trillion of lending that isn't being done.  Banks are scared out of their minds and are holding a huge amount of excess reserves... just in case- profits be damned.

This chart demonstrates that banks are not lending.  This chart explains why the money multiplier is contracting.  This chart explains why we have a credit crisis."
www.creditwritedowns.com/2008/12/chart-o...



---"Did FDIC Want CIT to Fail... Cramer pointed the finger directly at FDIC Chairwoman Sheila Bair. All the FDIC had to do was guarantee CIT’s debt, as it had done for many other lenders, and that TARP money would have been safe. And get this – CIT put in for guarantees back in January, but Bair sat on the application and provided no reason why."
www.cnbc.com/id/32011061
---"With the FDIC-backed TLGP program set to expire on October 31 (with a 6 month safety net optionality, whatever that means), GMAC did all it could to jump on the last train leaving the cheap taxpayer funded capital station. The government subsidized provider of car loans for cars nobody wants priced $2.9 billion of 3 year notes."
www.zerohedge.com/article/cash-sink-hole...
---"Federal Deposit Insurance Corp. Chairman Sheila Bair said she may give banks including Citigroup Inc. and JPMorgan Chase & Co. a reprieve from raising capital to support billions of dollars of securities that firms will have to bring onto their balance sheets."
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN2SJifeRtNs&pos=4
www.americanbankingnews.com/2009/12/04/f... 

6. giving troubled banks deadlines to raise capital or find buyer but at the same time sabotaging their attempts to stay independent by offering better deals in secret (translation= interested parties would wait until AFTER FDIC seizure to buy these banks cheap);

---"Wachovia Suitors May Delay Bidding After Dimon's Deal for Wamu... 'WaMu's takeover has proven that there's an easy way, if the FDIC is involved,' said Sean Egan, president of Egan-Jones in Haverford, Pennsylvania. 'You kick the hell out of the equity holders and bondholders. That may be the new model for bank takeovers.'''
www.bloomberg.com/apps/news?pid=20601087...

---"This week potential buyers looking to acquire BankUnited (BKUNA) have asked the FDIC to put the bank into receivership prior to selling its assets.  This comes after BankUnited failed to raise sufficient capital to meet a $1 billion injection requirement by its May 4th deadline, prompting a warning by the Office of Thrift Supervision.  Now the vulture capitalists are circling in the hopes that the FDIC will put a bullet to the bank and hawk off the assets at a rock bottom price."
seekingalpha.com/instablog/407662-troy-r...

7. refusing to honor cd rates for average consumers, yet was willing to use TLGP to help guarantee billions in bonuses for Wall Street institutions (not to mention TLGP's original purpose was to improve the severe credit crunch the FDIC itself had helped cause, see 4.);

---"When Banks Fail, So Do Those Promised CD Rates... FDIC Allows New Owners to Slash Interest Payments on Deposits"
huffpostfund.org/stories/2009/11/when-ba...

---


i2.cdn.turner.com/money/2009/05/12/news/fdic.guarantee.fortune/chart_debt.gif
www.bloomberg.com/apps/news

---"While the smaller commercial banks were increasing their loan portfolios during the last four weeks, large banks and foreign-related institutions were reducing theirs. For example, in the last four week period, large commercial banks reduced total loans by almost $52 billion. For the last 13-week period these banks have reduced all loans by $139 billion. And the decreases were all over the balance sheet: commercial and industrial loans were down by $27 billion; real estate loans were down by $40 billion; and consumer loans were down by $10 billion."
seekingalpha.com/article/172219-a-positive-trend-in-small-bank-lending

8. exacerbating lending crisis for small businesses by collecting prepayments from banks, including smaller and healthy institutions that have actually been doing loan servicing;

---"Ms. Bair aid that the prepayment proposal would have little impact on the ability of most banks to continue their lending businesses... Edward L. Yingling, president of the American Bankers Association... this prepayment will decrease the ability to lend"
www.nytimes.com/2009/09/30/business/economy/30regulate.html

9. terminating contracts and signing loss-sharing agreements in bank deals that ended up undermining Ms. Bair's own loan modification effort;

---"F.D.I.C.'s October agreement with JPMorgan Chase and Washington Mutual allows Chase to pick and choose which of the city’s 148 Washington Mutual branches it will keep. Chase will then turn over the rejects to the F.D.I.C. But here’s the kicker: According to sources, the F.D.I.C. can then simply terminate the leases of those rejected branches, all contractual obligations void."
www.observer.com/2008/real-estate/it-s-w...
---"If I'm OneWest, why would I want to waste my time negotiating through a Short Sale, when I can make the same amount of money (if not more) by just letting it go to foreclosure?  And we wonder why nobody can get a Loan Modification?  Why would OneWest approve a loan modification for this guy, when they can foreclose and make over $100k?  And, to add injury to insult, they have held this loan for 6 months!  Not a bad ROI, huh... This entire agreement between the FDIC and OneWest can be found here, on the FDIC website."
activerain.com/blogsview/1243528/is-the-...

10. advocating loan modification without doing follow-ups on the success/failure of the program;

---"Why Many Loan Modifications Fail... Chase disclosed in November that nearly a quarter of trial modifications had failed because the borrower did not make even a single payment, and that nearly half had failed to make all three payments required before the modification could become permanent."
www.nytimes.com/2009/12/04/business/econ...

11. violating FDIC statue;

---“Smaller banks are outraged over the one-time fee, Camden Fine, president of the Independent Community Bankers of America... Community bankers are feeling like they are paying for the incompetence and greed of Wall Street... Bair [DISMISSED] that suggestion... 'For risk-based assessments, our statute restricts us from discriminating against an institution because of size,' Bair wrote"
www.bloomberg.com/apps/news?pid=20601103...
"Big U.S. banks will shoulder a larger share of restoring the fund that guarantees bank deposits under a measure approved on Friday... Federal Deposit Insurance Corp Chairman Sheila Bair defended the formula saying large institutions deserved much of the blame for fueling the financial crisis by funding high-risk mortgages."
www.reuters.com/article/idUSN2239078120090522

12. intentionally manipulating accounting tricks for positive interpretations of FDIC actions;

---"'No-Risk' Insurance at FDIC"
www.nytimes.com/2009/04/07/business/07so...
---"New Rules!  Banks Can Lie About Commercial Real Estate Loans"
www.businessinsider.com/henry-blodget-ne...
---"Fudging Losses Is Easy When the FDIC Does It, Too... No wonder so many banks are delaying their losses. The Federal Deposit Insurance Corp. keeps showing them how, by doing the same thing with its own."
www.bloomberg.com/apps/news?pid=newsarch...

13. continuously attempting to save her ill-prepared agency and cover its dismal failure in supervision (revealed in many negative reports released by the FDIC Office of Inspector General) at the expense of everyone else besides the FDIC, including shareholders, bondholders, unsecured/secured creditors, uninsured depositors, community banks, and small business owners;

---"Ten of the 12 bank-collapse reviews released by the Fed and Treasury inspectors general this year fault oversight weaknesses including failure to limit excessive concentration in commercial real-estate loans. Examiners from the Fed, and Treasury’s Office of the Comptroller of the Currency and Office of Thrift Supervision also failed to issue enforcement orders and hold banks accountable for recommended changes... The FDIC’s inspector general released 26 reports in the same period, citing similar concerns."
www.bloomberg.com/apps/news?pid=20601087...
www.google.com/hostednews/ap/article/ALe...
---"A U.S. government plan for a public-private investment fund to buy distressed assets to help clean up banks' balance sheets is likely to generate a 'healthy" profit' for taxpayers and investors, the head of the Federal Deposit Insurance Corp said on Wednesday."
www.reuters.com/article/ousiv/idUSTRE52A...
"The facts: in April, the average auction clearing price on the 331 loans the FDIC sold in January and February was 49.3%. In March, the number of loans FDIC sold in various auctions increased almost four-fold to 1,328, for a total of $470 million in book values of sales, with the average price dropping even more: the latest being at 46.4%"



zerohedge.blogspot.com/2009/05/fdic-sold...
---"Ms. Bair is not happy having frozen the credit markets for months after hurriedly seizing WaMu, she wants to make sure that she freezes it forever! Her latest idea is to let the secured creditors take the fall for bank failures...

It is FDIC's job to insure banks against failures, and that job includes timely collection of premiums. If you neglected your fiduciary duty, then take the responsibility and resign from your post. But for heaven's sakes don't spew any more grand ideas. People who purchase bonds are traditionally averse to risk. If you make lending to banks risky, they will simply lend elsewhere.

Monitor banks closely and make new rules to decrease leverage, but to say that someone else should pay the price for you not doing your job, is not going to hold water."
sackbair.blogspot.com/2009/12/ms-bair-wa...

15. using the "delaying and pretending" tactics in bank seizures and sales, thereby immorally enslaving our children and grandchildren to billions of debts from future losses;

---"The FDIC is guaranteeing 9 billion in loans [in AmTrust deal]. The estimate is a bogus figure conceived by FDIC bureaucrats. They know that many of these loans will take a couple of years to default by which time they will be gone. These are the same type of loans that caused the S & L crisis."
online.wsj.com/article/SB125997349620477...

16. and WORST of all, ENGAGING IN POWER GRABBING AT THE EXPENSE OF THE INSURANCE FUND SPECIFIC FOR DEPOSIT PROTECTION, by overburdening the FDIC with billions of dollars worth of unwarranted liabilities ( i.e. TLGP, LLP, and loss sharing in bank sales)?  Why did Ms. Bair wait until early 2009 to ask for an extra $500 billion credit line increase from Congress, instead of demanding money from TARP/Stimulus Bill to help rebuild its DIF ratio that had already fallen below the Congresssional mandated minimum since June 2008?

---

seekingalpha.com/article/140503-fdic-s-f...


*imho*

www.huffingtonpost.com/2009/12/02/tiger-...
www.eurweb.com/images/articles/200410/ti...
cache.daylife.com/imageserve/07NrcS4dtR1...
http://www.nypost.com/p/news/business/item_cJtqXk6HVxfgw2080oaK5I
http://bailout.propublica.org/entities/96-citigroup
http://wwwimage.cbsnews.com/images/2009/11/30/image5835082x.jpg
http://image3.examiner.com/images/blog/EXID9259/images/jamieegrubsvh1.jpg
http://files.clubplanet.com/sitefiles/ArticleImages/2187/kalika1.jpg
http://www.acc-tv.com/images/wjla/news/washingtonmututal_wamu0911.jpg
http://money.cnn.com/2009/05/12/news/fdic.guarantee.fortune/index.htm?postversion=2009051215
http://maheshkabra.files.wordpress.com/2008/09/wachovia1.jpg
http://cache2.asset-cache.net/xc/87924642.jpg?v=1&c=IWSAsset&k=2&d=17A4AD9FDB9CF19375C05EF07E24E8D623F69195DD6CCB60B01E70F2B3269972
http://www.blogcdn.com/www.dailyfinance.com/media/2009/08/guaranty-200bn080309.jpg
http://www.sunvalleyonline.com/images/member_images/articles/FBIFailsTh.jpg
www.chicagoarchitecture.info/CAI/Images/...
pinnaclecivilengineering.com/sitebuilder...
www.latimes.com/media/photo/2009-11/5034...
www.dailymail.co.uk/news/article-1233559...

*imho*

Enough with the lies. 

Our current FDIC chairwoman, Ms. Sheila Bair, repeatedly insisted FDIC was funded exclusively by the banking industry, only to always accompany her statement with another: that her agency was backed by the full faith and credit of the US government ( another false statement, might I add).
market-ticker.denninger.net/archives/1660-The-FDIC-Is-Broke.html

US government meant taxpayers.

With the insurance balance turning negative last month, FDIC now became fully funded by our tax money.

It was tragic enough that the $500 billion FDIC credit line increase recently approved by Congress essentially forced us to compensate for Ms. Bair's incompetence by using our tax dollars to protect our own deposits.

What was even worse was the notion that our tax dollars might be ( if not already was) used to guarantee Ms. Bair's pet projects involving TLGP and PPIP. 

FDIC generally explained its decisions and actions starting with " To protect the depositors." 

Personally I failed to see how backing billions of bonds for GS and MS protect depositors.

Besides, only idiots would believe in those guarantees and refinancing if FDIC was truly an "independent agency."

Maybe TLGP bondholders should go after Ms. Bair and her " independent agency" if anything were to go wrong with GS or JP Morgan, instead of our $500 billion tax money.

No doubt Ms. Bair has turned FDIC into a colossal AIG.

The only difference was, AIG didn't have unlimited tax money to backstop its recklessness whereas FDIC, did.

Ms. Bair knew this and she has chosen to abuse her power to the maximum. 

What transparency?

What consistency?

Take a look at the latest example of bank seizure and sale:

"U.S. regulators blocked the Chinese bank Minsheng from acquiring United Commercial Bank in a deal that could have saved $1.7 billion in taxpayers' money and insurance... The Fed had warned it could not approve Minsheng's application quickly because it was required by law to closely consider Chinese regulatory practices, the newspaper said. The FDIC decided it could not wait before stepping in to protect depositors"
www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1920130420091120

So what criteria was the FDIC using to reach its least cost solution and waste this $1.7 billion?  Why did the agency agree, on the hand, to share billions of losses in the earlier sale of Guaranty Bank to a Spanish institution?

"Guaranty Bank, a deeply troubled Texas lender, was sold on Friday to Banco Bilbao Vizcaya Argentaria of Spain in one of the largest government-assisted deals offered to a foreign firm. The government, however, agreed to absorb most of the losses on $9.7 billion, or more than 80 percent, of the Guaranty assets included in the deal."
www.nytimes.com/2009/08/22/business/22bank.html

Similarly, in one of the earliest examples of wealth transfer to the liking of our regulators, FDIC reached the least cost solution, based on the few hours Wamu spent in receivership, by gifting the consumer friendly bank to JP Morgan in a fire-sale.

On the other hand, Wachovia, whose shareholders suffered a one day 90% drop in stock value from the initial $1 per share FDIC-mediated sale to Citigroup, received a far superior offer from Well Fargo when more time was accidentally given ( keep in mind Ms. Bair originally refused to give an interested WFC an extension for due diligence).

So Mr. Frank and Mr. Dodd, go ahead and give FDIC more power. 

Let the agency pick and choose which bank to save ( i.e. CIT vs. GMAC)

Let the agency back bank bonds for favored institutions such as GS and JPM so they can hand out billions in bonuses.

Let the agency spend the money it doesn't have.

Let the agency share billions of losses in bank sales.

Let the agency finance deals to overpay for toxic assets.

Let the agency practice "delay and pray" by imposing new rules that "help banks hide commercial real estate losses."
www.arizonarealestatenotebook.com/2009/11/07/new-fdic-rules-help-banks-hide-commercial-real-estate-losses/

In fact, let's just make Ms. Sheila Bair Queen U.S.A., because she has technically and informally become more powerful than any other government official, including President Obama:

Ms. Bair was able to guarantee and share losses in trillions with a negative fund balance and without going through Congress, but our former Treasury Secretary Mr. Paulson had to beg for his billions of TARP money.

Ms. Bair was able to finance private investors to overpay for toxic assets while receiving praises as a taxpayer advocate, but our current Treasury Secretary Mr. Geithner became the archenemy of the little people with his underhand dealing in the AIG-counterparty resolution.

Ms. Bair was able to gift billions of bonuses to GS and JP Morgan via bond guarantees, wipe out thousands of jobs and bondholders at will, and ignored self-imposed deadlines given to troubled institutions to raise capital or find a buyer and still be given more power via proposed new regulatory reform bills, but President Obama was harshly criticized for his GM bankruptcy intervention and according to the latest poll result, had just suffered a 50% drop in job approval rating.

Forbes was wrong.
www.forbes.com/2009/08/18/worlds-most-powerful-women-forbes-woman-power-women-09-angela-merkel_land.html

Ms. Bair was not the second most powerful woman, she was/is the most powerful person, period.

The truth was, the current financial crisis occurred because of both corrupt banking practices and more importantly, regulatory failure in whch government officials failed to do their jobs:

" At bank after bank, the examiners are discovering that state and federal regulators knew lenders were engaging in hazardous business practices but failed to act until it was too late."
dealbook.blogs.nytimes.com/2009/11/19/pathology-of-a-financial-crisis/

Instead of introducing new regulatory reform bills, our Congress should focus on proper enforcement of regulatory duties. 

It was beyond any logical comprehension how every single regulatory agency failed in its supervisory effort, including the Fed, the FDIC, OCC, and OTS.

"' We all could have done a better job,' said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation."
dealbook.blogs.nytimes.com/2009/11/19/pathology-of-a-financial-crisis/

Well, Ms. Bair, the job that you all failed to do cost this country millions of jobs and trillions of investments.

The job you all failed to do almost destroyed our economy.


*imho*

FDIC is the federal regulator for most of the smaller banks ( class NM), including three out of the four that failed today ( Gateway Bank, Prosperan Bank, and United Security Bank).  In fact, two out of the four banks that failed two weekends ago were also under its supervision ( Hillcrest Bank Florida and American United Bank). 
www2.fdic.gov/idasp/main.asp
fdic.gov/bank/individual/failed/banklist.html

Yet unlike the financial giants who received billions in government assistance, these smaller banks were offered very little help.  Regulatory agencies, callously oblivious to local needs, often manipulated rules and situations to account for the "least cost solution," with the FDIC taking on huge liabilities and sharing losses as the agency continued the massive transfer of wealth from little banks to the favored institutions.

Notice the similarities among San Joaquin Bank, FBOP, and First Bank of Idaho?

SAN JOAQUIN BANK/ COST TO FDIC: $103 MILLION
fdic.gov/news/news/press/2009/pr09185.html

" Bakersfield and Kern County have lost an excellent institution: San Joaquin Bank. As a community, we are left with numerous questions about this closure. The main question: ‘How could this happen?’

Shutting down a successful local business bank does not strike me as being in our community's best interest. It is all the more puzzling because the bank, in a heroic effort, raised the capital needed to meet the FDIC's formula for liquidity."
bakersfield.com/opinion/letters/x2990760...

" Elation over the last-minute rescue of San Joaquin Bank halted with the ring of a cell phone at 3:11 p.m. on Oct. 16... Even among those closest to the situation, the decision to shut down the bank came as something of a surprise. They had been told that the banking commissioner had extended a deadline that officially passed the night before, on Oct. 15, and that if the $27 million goal could be met by the end of the next business day, San Joaquin would be spared... New investments topped the $27 million mark that Friday afternoon.”
finreg21.com/news/san-joaquin-banks-fina...

“ San Joaquin Bank's failure is especially disappointing in light of suggestions that it need not have happened.  The bank was said to have secured the $27 million in capital that regulators demanded it nail down in order the stave off closure, only to face the axe anyway.”
bakersfield.com/opinion/editorials/x1675...


FBOP/ COST TO FDIC: $2.5 BILLION
fdic.gov/news/news/press/2009/pr09195.html

Nine banks, part of FBOP Corp, were seized and sold to U.S. Bancorp. Unlike most other troubled financial institutions, the banking operation failed not because of poor and reckless management but primarily because of its investments in FNM and FRE.  Due to rule changes it was no longer eligible for the TARP assistance originally promised.  Its plan to re-capitalize itself with private funding was not accepted.  The least cost solution for the FDIC at the time of seizure was probably sharing the $2.5 billion loss, but we would never know the "real least cost solution" if FBOP got more time or its re-capitalization proposal was accepted.

"The largest privately held banking group in the nation, the best community bank operation around, had been taken over... FBOP Corp. was felled by its investments in quasi-governmental Fannie Mae and Freddie Mac. The common banking industry practice of investing short-term assets, 30- or 60-day money in Fannie and Freddie, lost FBOP the majority of its capital base virtually overnight and allowed the government to claim the bank was seriously undercapitalized...

And why wouldn't the FDIC give the bank the extra week they requested to raise the funds... Why are taxpayer needs better served by putting us potentially on the hook for $2.5 billon, rather than by giving the bank another week?"
wednesdayjournalonline.com/main.asp

"Michael Kelly says bank holding company had been promised TARP funds, but rule change left it scrambling to raise private investments... FBOP was working with private investors to invest up to $750 million of new capital into the banks... we submitted a proposal to the regulators, but it has not been approved.  Regulators picked U.S. Bancorp to take over FBOP's banks."
chicagotribune.com/business/chi-tue-fbop...

Our current FDIC chairwoman, Ms. Sheila Bair, got even better with this one, invoking an old rule to gift USB 2 extra banks that didn't even fail. I wonder why WMBfsb, with allegedly $17 billion in cash, was not allowed to help its sister bank Wamu remain operative until TARP passed.
messages.finance.yahoo.com/Stocks_(A_to_Z)/Stocks_W/threadview
www.mediafire.com/

"Park National Bank didn't fail. It was ambushed... Park National Bank - days from closing on the $600 million in private capital that the FDIC demanded be raised - is dead. Simultaneously, the FDIC is handing over to another bank a reported $2.5 billion to take on Park National's assets."
wednesdayjournalonline.com/main.asp

"When Bad Banks Sink Good Ones... The Federal Deposit Insurance Corp. is allowed under a 1989 law to assess the costs of disposing of a failed bank that is part of a holding company to other banks with the same owner. The agency has used the mechanism just six times."
online.wsj.com/article/SB125720151735123867.html


FIRST BANK OF IDAHO/ COST TO FDIC: $191.2 MILLION
www.fdic.gov/news/news/press/2009/pr0906...

First Bank of Idaho had a June 30, 2009 deadline to raise its capital level but on April 24 OTS appointed FDIC as the receiver.  On the same day FDIC seized the bank and sold it to U.S. Bancorp.  Apparently FDIC had already found a buyer in secret just like it did with Wamu, therefore ignoring the deadline and the quick transaction.  On May 4 a bank board member Nancy Schauer argued against this action as being the least cost solution for FDIC and on May 9 Idaho state lawmakers demanded answers to such broken promises and reckless actions.

April 24, 2009
"First Bank of Idaho in Ketchum was closed by the Office of Thrift Supervision. The Federal Deposit Insurance Corp. was named receiver... U.S. Bancorp... [assumes] First Bank of Idaho's deposits, excluding $112.8 million in brokered deposits.  U.S. Bank agreed to buy $17.8 million of the failed bank's assets, or less than 4 percent."
bloomberg.com/apps...

May 4, 2009
"'The FDIC says they will lose $191 million because of what has happened but if they'd waited a few weeks it never had to happen, ' said Schauer... Now the losses are incalculable."
newwest.net/city/a...

May 9, 2009
"U.S. Reps. Mike Simpson and Walt Minnick sent letters Friday to the heads of the Federal Deposit Insurance Corp. and the Office of Thrift Supervision, asking for information about the decision to close the First Bank of Idaho... OTS gave the bank until June 30 to raise $10 million and bring its capital level to 12 percent.  But regulators moved to shut down the bank before that June deadline, shocking bank executives who contend they had investors lined up to give the bank a cash infusion and clear millions in bad loans... On April 24, the OTS appointed the FDIC receiver of the bank, and more than 60 FDIC officials seized it.  US Bank officials moved in that same day."
idahostatesman.com...


What happened to First Bank of Idaho was a travesty of justice, condoned by those who had the power to intervene but chose not do so, as well as by the lack of mainstream media coverage.

Then it happened again to FBOP, and to San Joaquin Bank.

What was the justification for OTS/FDIC to ignore their own deadline and seize First Bank of Idaho, with private funding already in place, earlier than promised?  Why did they then refuse to ignore another deadline and grant a short extension to Park National (FBOP), also with private funding in place, for the completion of necessary paperwork?

Why bother giving banks deadlines to raise capital or find a buyer when the FDIC already picked the winner?

Why charge assessment fees that hurt these banks even more to solve its insolvency, because the insurance corporation underestimated the magnitude of the current crisis and failed to build up its reserve fund?

FDIC's main mission was deposit protection, not TLGP or PPIP financing. Why didn't Ms. Bair ask for money from TARP or the Stimulus bill to help raise the DIF ratio that already fell below the mandatory Congressional minimum since June 2008 and turned negative last month?

Worse, TLGP was created to improve lending but Ms. Bair used this bond guarantee program to help non-lending banks such as Goldman Sachs raise billions of dollars without any restriction on how this money must be used.

Why were these regulators not held accountable for their inconsistent and unfair actions, especially when the Fed, OCC, OTS, and FDIC have all been criticized for their poor, slow, and weak supervisory efforts in many reports released by the Office of Inspector General?
www.bloomberg.com/apps/news

*imho*