FDIC Seizes 69 Banks In 2009 Is There A Better Way?

[JimofPennsylvan]

The FDIC has taken into receivership 69 banks this year as of the end of July. This is a lot of banks being shut down in America. Can the FDIC and the nation’s financial authorities do a better job in stopping this flood of bank closings. One important reason to pursue this is these small and regional shuttered banks are a precious resource for the communities and regions they operate in and the larger banks which the FDIC often sells these failed banks deposits to won’t have the commitment and connection to help these local communities and regions the shut down banks would. Moreover, there is a job loss often occurring with these receivership actions for some or all off the seized banks employees taken over by the FDIC which it would be better for the nation if this type of job loss could be reduced.

From media reports it is not at all clear to the general public the standards the FDIC uses to determine a bank needs to be shut down. A reasonable person would surmise that the primary reason is probably that a lot of these seized banks hold a lot of commercial loans which are either in default or close to default.

What is interesting about some of these banks is that they have a lot of assets. During this past week one of the seized banks had $705 million in assets another seized bank had $1.6 billion in assets. One would surmise that even after subtracting bad loans these banks have a lot of assets to build a strong bank long-term. Recent history shows that when the FDIC takes over banks it is having a tough time selling these banks, there is talk about splitting these banks into good and bad banks and selling the good banks and selling the bad banks at very distressed prices. The bottom line is the FDIC is losing big money seizing banks and selling them. Is anyone determining the FDIC costs to seize some of these larger seized banks and looking into the possibility of using a portion of the money that would be employed to pay the seizure costs and buy these “targeted for seizures” banks most bad assets, like construction loans, at a premium of market price but of course less than the book value so as to give these targeted banks the resources to grow back to strong health? Is anyone pursuing discussions with the Federal Reserve Bank about opening a loan window with low interest rates loans for these troubled banks with basically a strong foundation so they can get the capital to grow back to strong health? This current recession is the worst recession to hit the nation in the last seventy-five years it would be a shame to throw a lot of these valuable assets, banks, of local communities and regions into the trash because of a lack of creativity and a lack of effort!

 

[Sweet Willy]

The FDIC has taken into receivership 69 banks this year as of the end of July. This is a lot of banks being shut down in America. Can the FDIC and the nation’s financial authorities do a better job in stopping this flood of bank closings. One important reason to pursue this is these small and regional shuttered banks are a precious resource for the communities and regions they operate in and the larger banks which the FDIC often sells these failed banks deposits to won’t have the commitment and connection to help these local communities and regions the shut down banks would. Moreover, there is a job loss often occurring with these receivership actions for some or all off the seized banks employees taken over by the FDIC which it would be better for the nation if this type of job loss could be reduced.

From media reports it is not at all clear to the general public the standards the FDIC uses to determine a bank needs to be shut down. A reasonable person would surmise that the primary reason is probably that a lot of these seized banks hold a lot of commercial loans which are either in default or close to default.

What is interesting about some of these banks is that they have a lot of assets. During this past week one of the seized banks had $705 million in assets another seized bank had $1.6 billion in assets. One would surmise that even after subtracting bad loans these banks have a lot of assets to build a strong bank long-term. Recent history shows that when the FDIC takes over banks it is having a tough time selling these banks, there is talk about splitting these banks into good and bad banks and selling the good banks and selling the bad banks at very distressed prices. The bottom line is the FDIC is losing big money seizing banks and selling them. Is anyone determining the FDIC costs to seize some of these larger seized banks and looking into the possibility of using a portion of the money that would be employed to pay the seizure costs and buy these “targeted for seizures” banks most bad assets, like construction loans, at a premium of market price but of course less than the book value so as to give these targeted banks the resources to grow back to strong health? Is anyone pursuing discussions with the Federal Reserve Bank about opening a loan window with low interest rates loans for these troubled banks with basically a strong foundation so they can get the capital to grow back to strong health? This current recession is the worst recession to hit the nation in the last seventy-five years it would be a shame to throw a lot of these valuable assets, banks, of local communities and regions into the trash because of a lack of creativity and a lack of effort!

Many of these banks deserve to be shut down. They were running wild with depositors money.

The one thing I would like to see in the future is the ability of the FDIC, just like most insurers, to cancel the insurance. The FDIC could announce that in x amount of days, it will cease to insure bank Y. Then let the public they have screwed eat them alive. It would be a more fitting end for the lousy cheats.