WSJ: ***FDIC to Add Staff as Bank Failures Loom***

[El Pinko]

http://online.wsj.com/article/SB120398607404892133.html

FDIC to Add Staff as Bank Failures Loom
By Damian Paletta
Word Count: 622
WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.

The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.

FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.

[liberal N proud]

1. Anyone know how to identify a bank that is about to fail?

I am not currently worried about the bank where I do business but one never knows.

[Demeter]

3. The current assumption is there are no safe havens.

I've been paying attention for nearly a year--the only refuge left is gold, unless you can buy and store oil and its derivative products in quantity. And arable farmland with good water resources. And solar PV and other renewables. 3 month Treasuries are the only financial instruments recommended, probably because the losses are limited.

[Javaman]

8. When they stop giving out toasters for new accounts!

:shrug:

[dysfunctional press]

9. as long as you keep all your accounts under $100,000, you should be protected.

but if it ever gets to the fdic actually having to pay LOTS of depositers- the money probably won't be worth much, anyway.

[liberal N proud]

13. The $100,000 limit is never going to be a problem

Trust me.

That is the concern, if the banks fail, the mattress is the best bet, but you have to know when to get your money out, but most importantly are the direct deposits from employers and making sure that is there when you need it.
If a bank fails and you are direct depositing your paycheck, will you still have access to that money and how long might you be with out access?

My only concern.

[ProfessorGAC]

12. Yep

I'm on the board of directors for a small ($150 million) dollar community chartered bank. (Been on the board since the late 80's.)

Banks on the verge have poor capital to asset ratio. Too little capital to offset liabilities. Remember that for a bank, a loan is an asset, because it is effectively an investment that pays way more than an overnight note from Treasury. Other liabilities include things like open money (passbooks and MMA's) that could be withdrawn against capital without notice.

Another factor to look at is liquidity, which is the balance between cash assets and liabilities. If they've overextended the loan portfolio, they have minimal cash on hand that could show shortfalls vs. demand from account holders. The regulators HATE seeing that.

Another one is the non-credit card delinquency ratio. We have always run below 0.7%. Some of these banks with credit crunch problems are hitting 7%! Think about that: If they have $1 billion in loans, $70 million is delinquent. Since the loans are averaging 6% yield, they make $57 million on the good loans and are at risk of losing $70 million on the bad ones. They're already in the hole!

Those three things are generally a good indicator of solvency and viability.
The Professor

[liberal N proud]

14. Thanks

Thank you for the banking 101 refresher.

Excellent information

[Demeter]

2. Well, They'd Have To, Wouldn't They?

After all, training up a bunch of youngsters would mean there was a future in that kind of work...

[NMDemDist2]

4. Dallas?? Wasn't Crashcart spotted there this week??

:tinfoilhat:

Cheney shows up then they announce FDIC is 'beefing up'????

file under: things that make you go "hmmmm"

[Demeter]

5. Like Cheney Gives a Care About Banks or Bankers

No, I doubt that was his motivator.

[NMDemDist2]

6. Crashcart cares about money

especially his own and his cronies

:shrug:

[Demeter]

7. I Highly Doubt That Any of His Money is in American Banks

or any banks at all, for that matter. Other than a little for cash flow, it's safe somewhere else.

[NMDemDist2]

10. agreed, there was an thread last year that the Dick was taking his money

out of dollars and moving overseas

[NightWatcher]

11. Nike is also getting ready for Bank failures

[progressoid]

15. The GOP - "Forward into the past"