“Standard & Poor’s on Wednesday cut its ratings on 18 banks citing expectations of more difficult operating conditions due to volatile financial markets and tighter regulation.

Among the rating changes, S&P cut the counterparty credit ratings of Wells Fargo & Co by one notch to AA-minus, U.S. Bancorp by two notches to A-plus and Fifth Third Bancorp by two notches to BBB.

S&P also downgraded the counterparty credit ratings of Huntington Bancshares and Carolina First Bank by two notches to junk-status BB-plus with a negative outlook. It also cut Citizens Republic Bancorp counterparty credit rating by three notches to BB-minus with a negative outlook.”

The Associated Press reports that S&P analysts predict “permanent repercussions” still to come from the banking crisis that so many believe is over :

“Widescale changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release.

‘We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions,’ Quintanilla said. ‘Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace’s new reality. Such a transition period justifies lower ratings as industry players implement changes.’”

Reuters : S&P cuts credit ratings on 18 US banks

Associated Press : Standard & Poor’s cuts ratings on 18 banks

Bloomberg : U.S. Stocks Fall, Led by Banks on Downgrade; Health Shares Gain

“Now that stocks have rallied nearly 30% off their low, pundits agree: It’s a new bull market. So be very afraid.

Market punditry is a lagging indicator, not a leading one. Pundits are excellent at describing what has happened, not what is going to happen.”

Of course, many serious economists have been warning that the tumult in the financial sector is far from over, and that the markets will see large movements as a result. Nouriel Roubini made the rounds in Europe a couple of weeks ago, purveying that same message. The Independent reported on April 21 :

“In particular, the economist warned of further dangers ahead for the financial services industry in the US. ‘I see financial shocks in the months ahead. Some financial institutions are in so much trouble we may have to take them over,’ he said, before adding that losses in the industry could rise from $1 trillion to as high as $3.6 trillion.

Firms from across financial services will go out of business or be taken over, he said, particularly focusing on the bleak future for hedge funds.

Mr. Roubini also disagrees with more optimistic forecasts for the US economy. In an interview published on Forbes.com yesterday, he said that the prediction of a 2 per cent growth rate next year was far too bullish. He called it at somewhere around 1 per cent. ‘So while we are going to be technically out of a recession, it is going to feel like a recession,’ he added.

He blamed weak recovery, deflation which would dog the US for the next two years, and financial shocks for the lower-than-expected growth.”

Business Insider : Stop Thinking The 30% Stock Rally Means The Bear Market Is Over

Independent : Stock market bulls have got it wrong, warns Nouriel Roubini

“Regulators have delayed releasing the results of stress tests conducted on the nation’s largest banks until May 7, government officials familiar with the matter said Friday.

The government expects to release its assessment next Thursday afternoon and will provide information both on individual companies as well as the overall group, according to sources.

For weeks, Wall Street has been anxiously awaiting the results of the tests, which regulators originally indicated would be announced on May 4.

Austan Goolsbee, a top economic adviser to President Obama, indicated Friday that the delay was driven, in part, over a disagreement by banks over the results of the tests. Regulators began notifying participating institutions of the results last Friday.”

The Financial Times reports that Treasury officials are concerned about the effect of the test results on share prices in the financial sector :

“The authorities’ decision to let the original timetable slip also reflects the widespread belief that, after months of speculation since the tests were first announced in February, their outcome has the potential to disturb the markets.

Government sources said regulators were likely to release both aggregate and individual data for each of the 19 banks, detailing their losses and capital needs under adverse economic -scenarios.

Some of the banks will then supplement those data with regulatory filings and analysts’ calls. Bankers said several lenders had pleaded with regulators for more time to lay out plans to plug any capital shortfall identified by the stress tests, by raising equity from either the government or from the stock market.

People familiar with the situation said that, despite their objections, Citi and BofA – and at least four more lenders – were almost certain to need more equity capital.”

It is left to the Times of India to mention the obvious next step for the feds, in an article headlined Markets expect more bailouts after bank stress tests :

“The relief after banks’ better-than-expected results during the first quarter has been short-lived.

Standard & Poor’s warned in a report that the credit cycle is tougher than expected.

’Markets are concerned about the rapid deterioration in bank loan portfolios in the US, as not only consumer loans, but commercial and commercial real estate delinquencies are on the rise,’ S&P said.”

CNN Money : Bank stress test results delayed

Financial Times :Cautious regulators delay release of financial stress report

Economic Times : Markets expect more bailouts after bank stress tests

“America West Bank, Layton, Utah, was closed today by the Utah Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Cache Valley Bank, Logan, Utah, to assume all of the deposits of America West.

The failed bank’s three offices will reopen on Monday as branches of Cache Valley Bank. Depositors of America West Bank will automatically become depositors of the assuming bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches.”

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FDIC Failed Bank Information Page : Cache Valley Bank, Logan, Utah, Assumes All of the Deposits of America West Bank, Layton, Utah

Salt Lake Tribune : America West Bank shuttered

“Citizens Community Bank, Ridgewood, New Jersey, was closed today by the New Jersey Department of Banking and Insurance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with North Jersey Community Bank, Englewood Cliffs, New Jersey, to assume all of the deposits of Citizens Community Bank.

The failed bank’s sole office will reopen on Monday as a branch of North Jersey Community Bank. Depositors of Citizens Community Bank will automatically become depositors of the assuming bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until North Jersey Community Bank can fully integrate the deposit records of Citizens Community Bank.”

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FDIC Failed Bank Information Page : North Jersey Community Bank, Englewood Cliffs, New Jersey, Assumes All of the Deposits of Citizens Community Bank, Ridgewood, New Jersey

Los Angeles Times : Banks fail in New Jersey and Georgia

“Silverton Bank did not take deposits directly from the general public nor did it make loans to consumers. It was a commercial bank that provided correspondent banking services to its client banks.

Silverton Bank had approximately 1,400 client banks in 44 states, and operated six regional offices. It provided a variety of services for its clients, including credit card operations, clearing accounts, investments, consulting, purchasing loans, and selling loan participations. Since the FDIC created a new bank to take over the operations of Silverton Bank, there is not expected to be any meaningful impact on the bank’s clients.

The creation of the bridge bank allows the client banks to maintain their correspondent banking relationship with the least amount of disruption. The FDIC will operate Silverton Bridge Bank, N.A., to allow preexisting marketing efforts for the bank to continue.

At the time of its closing, Silverton Bank had approximately $4.1 billion in assets and $3.3 billion in deposits, all of which are expected to be within the FDIC’s insurance limits.”

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FDIC Failed Bank Information Page : FDIC Creates Bridge Bank to Take Over Operations of Silverton Bank, National Association, Atlanta, Georgia

Reuters : U.S. regulators seize Silverton commercial bank

“Banks on both sides of the Atlantic are being warned by regulators that they must hoard additional capital to weather the recession and future economic storms, in another series of steps designed to limit the risk-taking that pumped up the industry’s earnings during the credit boom.

Shares in Citigroup and Bank of America, two of the biggest banking giants in the US, fell sharply amid reports the Treasury has asked them to raise additional money after concluding ‘stress tests’ of their operations.

And the UK’s chief regulator, the Financial Services Authority’s chairman Lord Turner, earmarked higher capital requirements as ‘a possible way forward’ out of the financial crisis.

The US Treasury handed the country’s 19 biggest banks the preliminary results of the stress tests last week, requiring at least BofA and Citigroup to raise additional capital to fill holes in their balance sheet which could open up if the recession lasts longer and is deeper than expected.”

In a related story, Bloomberg is reporting that private investment analyst Paul Miller of Freidman, Billings, and Ramsey has estimated that BofA alone will need another $70 billion, after the firm conducted its own stress tests :

“Bank of America Corp. needs $60 billion to $70 billion of capital, according to Freidman, Billings, Ramsey Group Inc. analyst Paul Miller, who cited stress tests performed by his firm.

Bank of America should consider converting its preferred shares to common stock, including $27 billion in private hands ‘as soon as possible,’ Miller wrote in a note to clients today. Miller said his firm’s versions of the stress tests were ‘somewhat tougher’ than those performed by U.S. regulators.

Bank of America is among 19 lenders evaluating results of the formal U.S. stress tests. The Charlotte, North Carolina-based lender sold $45 billion of preferred stock to the Treasury’s bank rescue fund. Chief Executive Officer Kenneth Lewis and directors face opposition from shareholders to their reelection at tomorrow’s annual meeting after a 78 percent drop in the share price in 12 months.”

Influential finance blogger Barry Ritholz has said that a dozen or more of the 19 banks evaluated will be required to raise new capital. Because they are unlikely to be able to raise money from private sources, it is increasingly probable that the banks will need another round of bailout funds.

But with Congress unlikely to appropriate new dollars, some sort of “emergency” federal intervention may be the preferred plan for the summer months. This might be the subtext to FDIC chief Sheila Bair’s remarks yesterday at the Economic Club of New York. The Associated Press reports :

“Bair also expanded on her calls for a new system of regulation that prevents institutions from taking on excessive risk and becoming so big their failure would endanger the financial system. She said the FDIC would be the ideal agency to become the ‘resolution authority’ empowered to take over and resolve the risky institutions.

‘The FDIC is up to the task, and whether alone or in conjunction with other agencies, the FDIC is central to the solution,’ Bair said in her remarks to the Economic Club of New York. ‘Given our many years of experience resolving banks and closing them, we’re well suited to run a new resolution program.’

As the Obama administration and Congress work to fashion a new financial rule book to replace the ‘too big to fail’ model used by the government in the financial crisis, various regulators have been staking claims.”

Independent : Banks told to bolster their capital reserves

Bloomberg : Bank of America May Need $70 Billion, FBR Says

Associated Press : Bair: bailout fund can handle stress test results

“Even in this chilly economic climate, megabanks like Wells Fargo and Citigroup have somehow managed to make money.

A bit lower on the banking food chain however, there have been few signs of relief for big regional banks.

KeyCorp and Fifth Third Bancorp, two major banks headquartered in Ohio, both reported losses this week, hurt, in part, by their exposure to commercial real estate.

Further to the south, First Horizon National, one of Tennessee’s largest lenders, recorded its fourth-straight loss last week. Atlanta-based SunTrust reported an $875.4 million loss on Thursday.

And in other states that have been hit hard during the recession, such as Oregon, regional banks have found themselves unable to catch a break. Portland-based Umpqua Holdings reported a nearly $14 million loss last week.

Many of these regional banks have been stung by rising loan losses as more and more Americans find themselves out of work or simply unable to make ends meet.”

A Wall Street Journal report from Wednesday also focused on the superregional banks, emphasizing that their financial positions offer a truer barometer of the health of the economy than the dodgy balance sheets of the covertly subsidized big four :

“From Minnesota to Alabama, battered regional banks are warning a turnaround from the economic malaise is nowhere in sight.

A series of large regional banks reported Tuesday that rising losses from bad loans plagued first-quarter results. And, that’s forced names like U.S. Bancorp, Regions Financial Corp., and others to put more money aside to fortify against another wave of defaults.

It demonstrates not just massive U.S. institutions like Bank of America Corp. are reeling as the industry pays for extending credit to shaky borrowers. Smaller players scattered across the country are also feeling the pain, telling investors a protracted recession means things will get worse before they get better.

‘No significant turnaround will occur this year,’ Huntington Bancshares Inc. Chief Executive Stephen Steinour said after the Columbus, Ohio-based bank posted a $2.43 billion quarterly loss. He announced a nearly $300 million credit loss provision as the bank faces a stream of potential losses from commercial loans.

Huntington is just one example of a bank struggling as a troubled economy and tight credit environment make it more difficult for consumer and business borrowers to pay their debt. Falling stock markets and rising unemployment also illustrate the breadth and depth of the economic stress, regional bank CEOs said.

Investors have been paying particular attention to regional banks after BofA and Citigroup Inc. reported better-than-expected results through largely one-time gains and accounting changes. Regionals, which typically focus on bread-and-butter operations like lending and deposits, offer a purer snapshot of the industry.

‘We’re now dealing with an extreme recession, and the continued resolution of the over-indebted consumer,’ said Nancy Bush, an independent bank analyst. ‘This is not a 2009 phenomenon, but something we’ll possibly deal with into 2011 to 2012.’”

Bloomberg reports that the entire sector has become unattractive to investors, who believe that writedowns will continue to mount for the superregionals :

“’Across the board, regional banks just continue to fall short of expectations,’ said Terry McEvoy, an analyst with Oppenheimer & Co. ‘Net charge-offs are coming in higher than expected, and really as we move our way through the credit cycle, commercial lending is really driving those losses.’”

CNN Money : Regional banks can’t catch a break

Wall Street Journal : Regional Banks Show No Turnaround In Sight

Bloomberg : PNC, SunTrust, Fifth Third Boost Bad Debt Provisions

“First Bank of Idaho, FSB, Ketchum, Idaho, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with U.S. Bank, Minneapolis, Minnesota, to assume all of the deposits, excluding those from brokers, of First Bank of Idaho.

The failed bank had seven offices in Idaho and Wyoming. All seven offices will reopen on Monday as branches of U.S. Bank. Depositors of First Bank of Idaho will automatically become depositors of U.S. Bank. The two drive-up windows with Saturday hours will reopen tomorrow and operate under normal business hours.”

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FDIC Failed Bank Information Page : U.S. Bank, Minneapolis, Minnesota, Assumes All of the Deposits of First Bank of Idaho, Fsb, Ketchum, Idaho

Reuters : U.S. regulators close First Bank of Idaho

“The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of First Bank of Beverly Hills, Calabasas, California. The bank was closed today by the California Department of Financial Institutions, which appointed the FDIC as receiver.

For insured deposits placed directly with the bank and not through a broker, the FDIC will mail these customers checks for their insured funds on Monday. For insured deposits from brokers, the FDIC will pay the brokers directly once brokers provide the FDIC with the necessary documents. Brokered deposit customers should contact their brokers directly about the status of their accounts.”

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FDIC Failed Bank Information Page : FDIC Approves the Payout of the Insured Deposits of First Bank of Beverly Hills, Calabasas, California

Los Angeles Times : First Bank of Beverly Hills is closed by FDIC

“Michigan Heritage Bank, Farmington Hills, Michigan, was closed today by the Michigan Office of Financial and Insurance Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Level One Bank, Farmington Hills, Michigan, to assume all of the deposits, excluding those from brokers, of Michigan Heritage.

The three offices of Michigan Heritage will reopen on Monday as branches of Level One. Depositors of Michigan Heritage will automatically become depositors of Level One. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Level One can fully integrate the deposit records of Michigan Heritage.”

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FDIC Failed Bank Information Page : Level One Bank, Farmington Hills, Michigan, Assumes All of the Deposits of Michigan Heritage Bank, Farmington Hills

Detroit Free Press : Regulators close Michigan Heritage Bank, sell assets

“American Southern Bank, Kennesaw, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Bank of North Georgia, Alpharetta, Georgia, to assume all of the deposits, excluding those from brokers, of American Southern Bank.

The one office of American Southern Bank will reopen on Monday as a branch of Bank of North Georgia. Depositors of American Southern Bank will automatically become depositors of Bank of North Georgia. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Bank of North Georgia can fully integrate the deposit records of American Southern Bank.”

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FDIC Failed Bank Information Page : Bank of North Georgia, Alpharetta, Georgia, Assumes All of The Deposits of American Southern Bank, Kennesaw, Georgia

MarketWatch : American Southern Bank becomes year’s 26th failure

“Federal regulators released the criteria they used to assess the financial health of the nation’s 19 biggest banks on Friday, but provided little new information for investors to distinguish the industry’s weak players from the strong.

In a 21-page report, the Federal Reserve regulators broadly laid out the tools they used to project bank losses if the economy worsens, and officials established an unspecified baseline to measure how much additional capital the banks should add as a buffer against higher losses. But they provided no concrete metrics to assess the depths of the troubles facing the industry or specific banks.

Still, the Federal Reserve report suggested that regulators are focusing on the amount of capital that they want banks to hold in common stock, which makes it easier for them to absorb future losses as the recession wears on. That could force at least a handful of the 19 banks to raise significant amounts of new capital and could lead to greater government ownership stakes in the banks.”

An article by Reuters also emphasizes that the government seems focused on capital reserve levels :

“The top 19 U.S. banks need to hold a ‘substantial’ amount of capital above regulatory requirements to weather a potential worsening of the economic recession, the U.S. Federal Reserve said on Friday.

Supervisors said ‘stress tests’ regulators conducted at major banks were aimed at ensuring the institutions have enough capital in reserve to continue to lend in potentially bleaker conditions, and are not to be considered a measure of banks’ current solvency.”

As if to confirm what skeptics have been saying for weeks about the charade of the stress tests, the Fed also let it be known that none of the big banks would fail the tests anyway. The Associated Press is reporting :

“The Federal Reserve says the government is prepared to rescue any of the banks that underwent ‘stress tests’ and were deemed vulnerable if the recession worsened sharply.

The Fed says the 19 companies that hold one-half of the loans in the U.S. banking system won’t be allowed to fail — even if they fared poorly on the stress tests.”

New York Times : Regulators Disclose Criteria for Bank ‘Stress Tests’

Reuters : Fed looking for substantial capital buffers

Associated Press : Fed says gov’t ready to save stress-tested banks

“After six horrific quarters, several major U.S. banks finally reported profits. So is it time to celebrate?

No, says Simon Johnson, a senior fellow at the Peterson Institute, professor at MIT’s Sloan School of Management, and co-founder of the popular economics blog, BaselineScenario. In fact, if we’re not careful, we’ll find ourselves in another Great Depression.

What it is time to do, says Johnson, is look at the credit markets, which are telling us that the major U.S. financial institutions are being hit with a ‘speculative attack’:

‘The view being taken by people who trade credit in the United States is that we’re definitely not out of the woods. And I would say, in fact, there’s something of a run taking place in the credit market. Not a traditional bank run, but a speculative attack on some of the biggest financial players ….’

Specifically, traders are shorting credit of major banks, betting that the government won’t protect bondholders forever:

‘Basically these people are betting the big banks will be forced into some sort of default. Now, if enough people bet that, and if the banks can’t draw on enough external support, which in their case would be from the U.S. government, then these runs can be self-fulfilling. It’s extremely dangerous and a situation that’s really not been addressed by the U.S. authorities.’”

Yahoo Finance Tech Ticker : Traders Mounting “Speculative Attack” on U.S. Banks

Wall Street Journal : Market Looks to Banks’ Earnings Reports

“U.S. stocks declined following six straight weeks of gains as concern grew that credit losses are worsening and lower commodity prices dragged down energy and material producers.

Bank of America Corp., the lender that lost three-quarters of its market value in the past year, tumbled 16 percent as rising charge-offs for uncollectible loans overshadowed better- than-estimated earnings. Citigroup Inc. dropped 15 percent after Goldman Sachs Group Inc. said the bank’s credit losses are growing at a ‘rapid rate.’ U.S. Steel Corp. and Exxon Mobil Corp. declined as oil and industrial metal prices decreased.

‘The market seems to follow the direction of financial stocks one way or another,’ said Keith Wirtz, who helps oversee $20 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. ‘There are definitely more writedowns ahead and more challenges for the loan portfolios, particularly in the consumer side of the equation.’”

After sending a couple of ward heelers out in the rain to the Sunday shows to deny that the banks will be nationalized, the Obama administration leaked to the New York Times that another round of stealth nationalization is already underway :

“President Obama’s top economic advisers have determined that they can shore up the nation’s banking system without having to ask Congress for more money any time soon, according to administration officials.

In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.

Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return.

While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.”

Unfortunately for Lawrence Summers and his umbrella-holder Timothy Geithner, focusing on the banks is a great strategy for 2006. The damage from the financial sector’s overflowing bathtub has now caused mold downstairs in the broader economy.

Even if the banks are eventually stabilized through zombification, the lobbyists and their politicians haven’t yet even considered lifting a finger to fix all the leaky dikes. The Associated Press reports :

“The Conference Board said Monday that its monthly forecast of economic activity fell 0.3 percent in March and has not risen in nine months. Economists surveyed by Thomson Reuters expected a 0.2 percent decline.

And without the government’s intervention in the economy, boosting the money supply and tamping down interest rates, analysts said the forecast likely would have been worse.

The index is designed to forecast economic activity in the next three to six months based on 10 components, such as stock prices, the money supply, jobless claims, new orders by manufacturers and building permits.

The index for February was better than previously reported, falling 0.2 percent instead of 0.4 percent. But it was revised lower in January to a 0.2 percent decline, instead of a 0.1 percent increase.”

Bloomberg : U.S. Stocks Tumble as Financials, Commodity Shares Retreat

New York Times : U.S. May Convert Banks’ Bailouts to Equity Share

Associated Press : Leading economic indicators dip more than expected

“Great Basin Bank of Nevada, Elko, Nevada, was closed today by the Nevada Financial Institutions Division, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Nevada State Bank, Las Vegas, Nevada, to assume all of the deposits of Great Basin Bank of Nevada.

The five offices of Great Basin Bank of Nevada will reopen on Monday as branches of Nevada State Bank. Depositors of Great Basin Bank of Nevada will automatically become depositors of Nevada State Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Nevada State Bank can fully integrate the deposit records of Great Basin Bank of Nevada.”

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FDIC Failed Bank Information Page : Nevada State Bank, Las Vegas, Nevada, Assumes All of the Deposits of Great Basin Bank of Nevada, Elko, Nevada

Reuters : Great Basin Bank closed by U.S. regulators

“American Sterling Bank, Sugar Creek, Missouri, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Metcalf Bank, Lee’s Summit, Missouri, to assume all of the deposits of American Sterling Bank.

The Missouri offices of American Sterling will reopen on Saturday, and the offices in California and Arizona will reopen on Monday as branches of Metcalf Bank. Depositors of American Sterling Bank will automatically become depositors of Metcalf Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Metcalf Bank can fully integrate the deposit records of American Sterling Bank.”

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FDIC Failed Bank Information Page : Metcalf Bank, Lee’s Summit, Missouri, Assumes All of the Deposits of American Sterling Bank, Sugar Creek, Missouri

Kansas City Star : American Sterling Bank in Sugar Creek collapses

“The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials, as it tries to restore confidence in the financial system without unnerving investors. The administration has decided to reveal some sensitive details of the stress tests now being completed after concluding that keeping many of the findings secret could send investors fleeing from financial institutions rumored to be weakest.

While all of the banks are expected to pass the tests, some are expected to be graded more highly than others. Officials have deliberately left murky just how much they intend to reveal — or to encourage the banks to reveal — about how well they would weather difficult economic conditions over the next two years.

As a result, indicating which banks are most vulnerable still runs some risk of doing what officials hope to avoid.”

In the accompanying video, Aaron Task and Henry Blodget of Yahoo Finance interview analyst Scott Bleier, who stresses that at this point even the experts still have no idea how to value the big four banks, which he says are already effectively nationalized. Blodget posts on the Business Insider :

“The U.S. government has finally been forced to do the right thing, which is share some of the results of the bank “stress tests” after they are completed.

As we’ve complained, the “stress tests” aren’t stressful enough, and are therefore basically propaganda designed to create the appearance of a healthy banking system, but more information is better than less.

There is some concern that releasing the stress test results will immediately trigger a run on the lousy banks. If the results seemed lousy enough to cause a run, we doubt the government would release the information (remember–the government thinks we can’t handle the truth.) But if there’s a run on a couple of big banks, then so be it. Better to deal with the problem sooner rather than later.”

New York Times : U.S. Planning to Reveal Data on Health of Top Banks

Yahoo Finance Tech Ticker : U.S. May Rat Out Crap Banks After Stress Test

“New Frontier Bank, Greeley, Colorado, was closed today by the State Bank Commissioner, by Order of the Banking Board of the Colorado Division of Banking, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC created the Deposit Insurance National Bank of Greeley (DINB), which will remain open for approximately 30 days to allow depositors time to open accounts at other insured institutions. At the time of closing, the receiver immediately transferred to the DINB all insured deposits of New Frontier, except for brokered deposits, certificates of deposit (CDs) and individual retirement accounts (IRAs). The receiver also transferred to the DINB all secured public unit deposits. Under the FDI Act, the FDIC may create a deposit insurance national bank to ensure that depositors have continued access to their insured funds where no other bank has agreed to assume the insured deposits.”

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FDIC Failed Bank Information page : FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of New Frontier Bank, Greeley, Colorado

CBS News : Regulators Close Colorado Bank

“Cape Fear Bank, Wilmington, North Carolina, was closed today by the North Carolina Office of Commissioner of Banks, which then appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Federal Savings and Loan Association of Charleston (First Federal), Charleston, South Carolina, to assume all of the deposits of Cape Fear Bank.

Cape Fear Bank’s eight offices will reopen on Monday as branches of First Federal. Depositors of Cape Fear Bank will automatically become depositors of First Federal. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until First Federal can fully integrate the deposit records of Cape Fear Bank.”

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FDIC Failed Bank Information page : First Federal Savings and Loan Association of Charleston, Charleston, South Carolina, Acquires All of the Deposits of Cape Fear Bank, Wilmington, North Carolina

Associated Press : Cape Fear Bank becomes 22nd US bank failure of ‘09