Bank Failures - May 1, 2009

The list of Bank Failures and Assistance Transactions is updated May 1, 2009.

America West Bank, Layton, Utah, with approximately $299.4 million in assets, was closed. Cache Valley Bank, Logan, Utah, has agreed to assume all deposits (approximately $284.1 million).
(PR-63-2009)

Citizens Community Bank, Ridgewood, New Jersey, with approximately $45.1 million in assets, was closed. North Jersey Community Bank, Englewood Cliffs, New Jersey, has agreed to assume all deposits (approximately $43.7 million). (PR-62-2009)

Silverton Bank, N.A., Atlanta, Georgia, with approximately $4.1 billion in assets and $3.3 billion in deposits was closed. The FDIC created a bridge bank, Silverton Bridge Bank, N.A., to take over operations. (PR-61-2009)

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2 More US bank Failures

Regulators close banks in Illinois, Nevada
By SARA LEPRO, AP Business Writer
Friday, February 27, 2009
(02-27) 17:15 PST New York (AP) --

Regulators on Friday closed Heritage Community Bank in Illinois, and Security Savings Bank in Nevada, marking 16 failures this year of federally insured institutions.

The Federal Deposit Insurance Corp. was appointed the receiver of the banks.

Heritage Community Bank, based in Glenwood, Ill., had total assets of $232.9 million and deposits of $218.6 million as of Dec. 5. MB Financial Bank of Chicago agreed to assume all of Heritage's deposits, including those from brokers. All four of Heritage's branches will reopen on Saturday as branches of MB Financial.

Additionally, MB Financial agreed to buy $230.5 million in assets at a discount of $14.5 million. The FDIC will retain the remaining assets for a later sale. The FDIC and MB Financial also entered into a loss-sharing agreement in which MB Financial will share in the losses on about $181 million in assets.

Henderson, Nev.-based Security Savings Bank had total assets of about $238.3 million and deposits of $175.2 million as of Dec. 31. Las Vegas-based Bank of Nevada agreed to assume all of the deposits of Security Savings Bank, and purchase $111.3 million in assets. Security Savings' two offices will reopen Monday as Bank of Nevada branches.

The FDIC estimates that the cost to the deposit insurance fund from the closures will be about $100.7 million. Regular deposit accounts are insured up to $250,000.

The agency now expects bank failures will cost its insurance fund around $65 billion through 2013, up from an earlier estimate of $40 billion.

As unemployment rises and home prices fall, loan delinquencies and defaults are expected to keep soaring, which means bank failures are likely to escalate. The FDIC had 252 banks and thrifts on its list of troubled institutions at the end of 2008, up from 171 in the third quarter.

Facing a depleting insurance fund, federal regulators on Friday raised the fees banks pay and levied an emergency premium in a bid to collect $27 billion this year — placing further burden on an already struggling industry.

The law requires the insurance fund to be maintained at a certain minimum level of 1.15 percent of total insured deposits. But it fell below that minimum in mid-2008.

Twenty-five U.S. banks failed last year — including two of the biggest thrifts — more than in the previous five years combined and up from only three failures in 2007.

As a result, the deposit insurance fund dropped to $18.9 billion at Dec. 31 — the lowest level since 1987 — from $52.4 billion at the end of 2007.

President Barack Obama this week outlined a budget that called for spending up to $750 billion more for additional financial industry rescue efforts on top of the $700 billion Congress has already approved. The government also confirmed it will buy preferred shares from banks that can be converted into common shares, and the Treasury Department began to "stress test" the country's biggest banks to determine which might need more capital if the economy eroded further.

On Friday, the government announced plans to increase its stake in beleaguered Citigroup Inc. to as much as 36 percent by converting its preferred stock to common stock. While the conversion will dilute current shareholders' investments, a wider equity base means better protection against future losses.

Still, the news offered little comfort to investors who are worried about the stability of other banks.

Labor Dept Stats - Jobs Data Feb 14

WASHINGTON (Reuters) - The number of U.S. workers continuing to claim jobless benefits notched a fresh record in the second week of February, Labor Department data showed on Thursday, while new claims for aid were the highest since 1982.

The number of people remaining on the benefits roll after drawing an initial week of assistance increased by 114,000 to a 5.112 million in the week ended February 14, the most recent week for which data is available. The so-called continued claims topped every estimate in a Reuters poll of 15 economists, which had a consensus forecast of 5.00 million.

Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 667,000 in the week ended February 21 from a revised 631,000 the prior week, the Labor Department said. It was the highest reading since October 1982, when claims reached 695,000.

The year-long U.S. recession has savaged the labor market and sent the unemployment rate soaring, with some economists fearing it will pierce 9 percent in 2009 from 7.6 percent in January and mount further next year.

Analysts polled by Reuters had forecast 625,000 new claims versus a previously reported count of 627,000 the week before.

A Labor Department official said there were no special factors impacting the numbers.

The four-week average of new jobless claims, a better gauge of underlying labor trends because it irons out week-to-week volatility, increased to 639,000 from 620,000 the week before. This was also the highest reading since October 1982, when the four-week average was 641,750.

Marc Faber: Economy, Inflation and Markets 12/29

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Automakers - 3 million Jobs Gone

Three million jobs could be at stake if one of the big three automakers fails, and the prospect of a bailout is looking bleak. Michelle Miller reports.
Three million jobs could be at stake if one of the big three automakers fails, and the prospect of a bailout is looking bleak. Michelle Miller reports.
(CBSNewsOnline)

TED Spread - Indicator

The TED spread, or the difference between US Treasury bill and eurodollar interest rates, is an indicator of perceived credit risk in the general economy. US government Treasury bills are considered risk-free while eurodollar borrowing costs, measured by the London interbank offered rate (LIBOR), reflect the credit risk of lending to commercial banks.

When the TED spread increases it is a sign that lenders believe the risk of default on interbank loans is increasing. Interbank lenders therefore demand a higher rate of interest, or accept lower returns on safe investments such as T-bills. When the risk of banks defaults is considered to be decreasing, the TED spread decreases. The TED spread fluctuates over time but has often remained within the range of 10 and 50 basis points (0.1% and 0.5%), at least until 2007. A rising TED spread often presages a downturn in the U.S. stock market, as it indicates that liquidity is being withdrawn.

- Clive McKeef

US Cities Begging for help -

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Let Automakers Fail - No Bailout - Peter Shiff