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.
Saturday, February 28, 2009
Thursday, February 26, 2009
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.
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.
Sunday, February 8, 2009
Friday, January 2, 2009
Sunday, December 14, 2008
Fed to press rates toward zero
WASHINGTON (Reuters) – The U.S. Federal Reserve is expected to drop interest rates close to zero on Tuesday, but anticipated remarks on unconventional methods to dispel a year-old recession are what will really matter.
Economists forecast a clear statement that the U.S. central bank will aggressively deploy so-called quantitative easing measures to shelter the economy from a steepening downturn, but do not expect details of what steps it will actually take.
Those words would accompany a decision by the Fed to lower its target for overnight rates by at least a half-percentage point, economists believe.
A half-point cut would take the bellwether federal funds rate to just 0.5 percent, the lowest on records dating to July 1954, as the central bank battles a recession many think will stretch well into next year.
The announcement is expected around 2:15 p.m. on Tuesday at the end of a two-day meeting. The gathering had initially been scheduled for a single day, but was extended so policy-makers could study options for unusual steps to spur the economy with little room left to lower borrowing costs.
"From here on out, monetary policy has to rely primarily on non-traditional tools, tools other than the funds rate, to try to stimulate the economy," said former Fed Governor Lyle Gramley, who expects the Fed to spell this out.
More >> http://news.yahoo.com/s/nm/20081214/bs_nm/us_usa_fed_3
By Alister Bull Alister Bull – Sun Dec 14, 12:19 pm ET
Economists forecast a clear statement that the U.S. central bank will aggressively deploy so-called quantitative easing measures to shelter the economy from a steepening downturn, but do not expect details of what steps it will actually take.
Those words would accompany a decision by the Fed to lower its target for overnight rates by at least a half-percentage point, economists believe.
A half-point cut would take the bellwether federal funds rate to just 0.5 percent, the lowest on records dating to July 1954, as the central bank battles a recession many think will stretch well into next year.
The announcement is expected around 2:15 p.m. on Tuesday at the end of a two-day meeting. The gathering had initially been scheduled for a single day, but was extended so policy-makers could study options for unusual steps to spur the economy with little room left to lower borrowing costs.
"From here on out, monetary policy has to rely primarily on non-traditional tools, tools other than the funds rate, to try to stimulate the economy," said former Fed Governor Lyle Gramley, who expects the Fed to spell this out.
More >> http://news.yahoo.com/s/nm/20081214/bs_nm/us_usa_fed_3
By Alister Bull Alister Bull – Sun Dec 14, 12:19 pm ET
Wednesday, December 10, 2008
World Bank: Global recession possible next year
World Bank says deep global recession possible in 2009 due to international banking crisis
WASHINGTON (AP) -- Economic growth prospects for both high income and developing countries have deteriorated substantially and the possibility of a very deep global recession cannot be ruled out, the World Bank said Tuesday.
The international banking crisis that erupted in September after more than a year of less acute financial turmoil has substantially reinforced the cyclical downturn that was already under way, the bank said in a report devoted to assessing economic prospects for 2009.
"Following the insolvency of a large number of banks and financial institutions in the United States, Europe and the developing world, financial conditions have become much tighter, capital flows to developing countries have dried up and huge amounts of market capitalization have evaporated," the bank said.
The bank predicted world economic growth will be 2.5 percent in 2008 and 0.9 percent in 2009. It said developing countries will likely grow 4.5 percent next year, down from 7.9 percent in 2007, while the economies of high income countries will shrink.
Even if the strong measures governments took to restore confidence in the international banking system work and credit begins to thaw, a number of developing countries are likely to face substantial strains, possibly including bank failures and currency crises, the bank said.
"In these very uncertain circumstances," the bank said, "policy makers must place a premium on reducing the likelihood of domestic turmoil by reacting swiftly and forcefully to emerging difficulties, including, if necessary, seeking assistance from the International Monetary Fund.'"
The IMF provides rescue packages to countries in financial crises while the bank, its sister institution, lends money or makes grants for development projects.
"People in the developing world have had to deal with two major external shocks ---- the upward spiral in food and fuel prices followed by the financial crisis, which has eased tensions in commodity markets but is testing banking systems and threatening job losses around the world," said Justin Lin, the bank's chief economist. "Urgent steps are needed to help reduce fallout from the crisis on the real economy and on the poorest."
In response to the crisis the bank said it was increasing its support for developing countries, through new spending commitments of up to $100 million over the next three years. The bank said its private sector arm, the International Finance Corp., would help by providing trade financing, helping banks recapitalize or aiding infrastructure projects facing financial distress.
By Harry Dunphy, Associated Press Writer, Wednesday December 10, 9:21 am ET
http://www.accesstradingmgmt.com/index.html
WASHINGTON (AP) -- Economic growth prospects for both high income and developing countries have deteriorated substantially and the possibility of a very deep global recession cannot be ruled out, the World Bank said Tuesday.
The international banking crisis that erupted in September after more than a year of less acute financial turmoil has substantially reinforced the cyclical downturn that was already under way, the bank said in a report devoted to assessing economic prospects for 2009.
"Following the insolvency of a large number of banks and financial institutions in the United States, Europe and the developing world, financial conditions have become much tighter, capital flows to developing countries have dried up and huge amounts of market capitalization have evaporated," the bank said.
The bank predicted world economic growth will be 2.5 percent in 2008 and 0.9 percent in 2009. It said developing countries will likely grow 4.5 percent next year, down from 7.9 percent in 2007, while the economies of high income countries will shrink.
Even if the strong measures governments took to restore confidence in the international banking system work and credit begins to thaw, a number of developing countries are likely to face substantial strains, possibly including bank failures and currency crises, the bank said.
"In these very uncertain circumstances," the bank said, "policy makers must place a premium on reducing the likelihood of domestic turmoil by reacting swiftly and forcefully to emerging difficulties, including, if necessary, seeking assistance from the International Monetary Fund.'"
The IMF provides rescue packages to countries in financial crises while the bank, its sister institution, lends money or makes grants for development projects.
"People in the developing world have had to deal with two major external shocks ---- the upward spiral in food and fuel prices followed by the financial crisis, which has eased tensions in commodity markets but is testing banking systems and threatening job losses around the world," said Justin Lin, the bank's chief economist. "Urgent steps are needed to help reduce fallout from the crisis on the real economy and on the poorest."
In response to the crisis the bank said it was increasing its support for developing countries, through new spending commitments of up to $100 million over the next three years. The bank said its private sector arm, the International Finance Corp., would help by providing trade financing, helping banks recapitalize or aiding infrastructure projects facing financial distress.
By Harry Dunphy, Associated Press Writer, Wednesday December 10, 9:21 am ET
http://www.accesstradingmgmt.com/index.html
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