“The unemployment rate in the West jumped over 10 percent last month, the first time that regional threshold has been broken in about 25 years. On the state level, eight set record-highs and only two — Nebraska and Vermont — did not report increases.

The Labor Department reported Friday that 48 states and the District of Columbia saw employment conditions deteriorate last month. The fallout from the longest recession since World War II, was the worst in Michigan as automakers cut tens of thousands of jobs. Its unemployment rate rose to 14.1 percent.

The West region reported the highest jobless rate at 10.1 percent. The last time any region had a rate of at least 10 percent was September 1983, when the country was emerging from a severe recession.

The region is home to California, where the jobless rate jumped to a record 11.5 percent last month, Nevada, where it’s a record 11.3 percent, and other states that have been slammed when the housing boom went bust — snatching jobs and wealth.

The other six states that set new highs on records dating to 1976 were: North Carolina, Oregon, Rhode Island, South Carolina, Florida and Georgia.”

The situation is no longer confined to the Western region, or to the worst of the residential bubble states, as deteriorating fundamentals undermine the US economy in more serious and lasting ways than even during the 1930’s. CNN reports that thirteen states now have official unemployment rates above 10 percent :

“Several states and regions posted their highest unemployment rate since the report debuted in 1976.

Over the year, jobless rates were higher in all 50 states and the District of Columbia.

Michigan once again led the nation with a 14.1% jobless rate, up from 12.9% a month earlier, followed again by Oregon at 12.4%, up from 12% in April. Thirteen states have rates above 10%.”

Associated Press : Jobless rate in Western US tops 10 percent

CNN Money : Jobless rate rises in nearly all states

Bureau of Labor Statistics : The Employment Situation : May 2009

“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

“From teachers to real estate agents, these budding emergency gurus say the dismal economy has made them prepare for financial collapse as if it were an oncoming Category 5 hurricane. They worry about rampant inflation, runs on banks, bare grocery shelves and widespread power failures that could make taps run dry.”

At least working America’s interest in end-times preparedness has created a bit of survivalist-bubble, the AP reports;

“The surge in interest in emergency stockpiling has been a bonanza for camping supply companies and military surplus vendors, some of whom report sales spikes of up to 50 percent. These companies usually cater to people preparing for earthquakes or hurricanes, but informal customer surveys now indicate the bump is from first-time shoppers who cite financial, not natural, disaster as their primary concern, they say.”

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Associated Press : Crisis spurs spike in ’suburban survivalists’

“Federal Reserve Chairman Ben Bernanke told Congress Tuesday the economy should start growing again later this year, his most optimistic assessment of the country’s financial health since the recession struck with force last year.”

Bernanke sees reasons for renewed hope that the economy may be on the rebound :

“’We continue to expect economic activity to bottom out, then to turn up later this year,’ he told lawmakers. ‘We expect that the recovery will only gradually gain momentum.’

Recent data suggest the recession may be loosening its grip on the country, Bernanke said.

‘The pace of contraction may be slowing,’ he said. It was similar to an observation the Fed made last week in deciding not to take any additional steps to shore up the economy.”

If the tenor of Bernanke’s economic prognosis sounds familiar, it’s only because you’re paying attention. Here’s what the Fed chairman told an audience of distinguished academics and policymakers at the International Monetary Conference in Barcelona in June, 2008 :

“We may see somewhat better economic conditions during the second half of 2008, reflecting the effects of monetary and fiscal stimulus, reduced drag from residential construction, further progress in the repair of financial and credit markets, and still solid demand from abroad. This baseline forecast is consistent with our recently released projections, which also see growth picking up further in 2009.”

Today’s guardedly upbeat remarks were made in Congressional testimony before the Joint Economic Committee. Bernanke told the same committee in March, 2007 :

“Growth in consumer spending should continue to support the economic expansion in coming quarters. In addition, fiscal policy at both the federal and the state and local levels should impart a small stimulus to economic activity this year.”

Bernanke’s forecast for 2007 concluded :

“Overall, the economy appears likely to continue to expand at a moderate pace over coming quarters. As the inventory of unsold new homes is worked off, the drag from residential investment should wane. Consumer spending appears solid, and business investment seems likely to post moderate gains.”

Keenly sensing a “cooling” of the US housing market in 2006, USA Today reported that Bernanke was expecting a “soft landing” :

“The housing market, after flying high for five years, has lost altitude but appears headed for a safe landing, Federal Reserve Chairman Ben Bernanke said Thursday.

‘It seems pretty clear now that the U.S. housing market is cooling,’ Bernanke said in a question-and-answer session following a speech he delivered on banking in Chicago.

He noted that home sales and construction are slowing.

‘Our assessment at this point … is that this looks to be a very orderly and moderate kind of cooling,’ Bernanke said.”

A former professor of economics at Princeton, with degrees from Harvard and MIT, it is certain that Bernanke is one of the best and brightest of his generation. The question is, at what?

Associated Press : Bernanke: Economy should grow again later in 2009

Federal Reserve Board : Remarks by Chairman Ben S. Bernanke at the International Monetary Conference, Barcelona, Spain (via satellite), June 3, 2008

Federal Reserve Board : Prepared Testimony of Chairman Ben S. Bernanke Before the Joint Economic Committee, U.S. Congress, March 28, 2007

USA Today : Bernanke: Housing market is headed for a soft landing (May 18, 2006)

“A larger share of banks has made it more difficult for people to obtain home mortgages over the last three months even as demand has grown, the Federal Reserve reported Monday.

The Fed’s new quarterly survey found that about 50 percent of U.S. banks tightened their lending standards on prime mortgages, up from about 45 percent in the survey issued in early February.

Meanwhile, 65 percent of banks said they tightened standards on nontraditional mortgages, such as adjustable-rate loans with multiple payment options. That was up from 50 percent in the last survey.

‘Even if you had a stellar credit history, banks were reluctant to lend in this environment,’ said Richard Yamarone, economist at Argus Research. With unemployment rising, it raises the odds of more people defaulting on their mortgages, he said.”

According to the Financial Times, the tendency was also apparent in commercial loan activity :

“About 40 per cent of US banks said they had tightened standards on commercial and industrial loans to businesses over the previous three months, the survey reported. The Fed said this proportion was “still very elevated” but noted that it represented fewer than half the banks for the first time since January 2008.

About 80 per cent of US banks said they had increased spreads on loans to large and mid-sized businesses, down from 95 per cent in January.

‘Large majorities of both domestic and foreign banks reported a less favourable or a more uncertain outlook, a worsening of industry-specific problems and a reduced tolerance for risk’ as reasons for tightening standards and terms on business loans, the Fed said.”

Associated Press : Fed says more banks tighten home loan standards

Financial Times : Bank lending terms keep squeeze on consumers

“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

“France’s eight labor unions joined for the first time for May Day demonstrations across the country to protest government measures on the economic crisis as insufficient and corporate leaders as out of touch.

Protests also took place today in Berlin, Athens and Istanbul. In Russia, tens of thousands of demonstrators for and against the government marched against a backdrop of rising unemployment and economic gloom, the Associated Press said.

‘Labor is changing; for the first time in perhaps decades, we are in agreement at the core,’ said Francois Chereque, secretary general of France’s biggest union, Confederation Francaise Democratique du Travail, in an RTL radio interview today. ‘There is a strong unity among the unions.’

Labor unrest is on the rise in France, as seen with ‘bossnappings,’ where workers hold company executives hostage to force negotiations on job cuts and plant closings, and demonstrations. In March, as many as 3 million people, or almost 5 percent of the population, marched in 213 protests. A January strike brought out 1.1 million people, according to police, and spurred President Nicolas Sarkozy to meet union leaders and offer more money in the country’s stimulus plan.”

Although the mainstream media shuns the European protests for the most part, May Day has in recent years become the occasion for massive immigrants’ rights marches in the US. According to the Associated Press :

“Thousands of immigrants and their families marched in cities from coast to coast, hoping to channel the political muscle Hispanics flexed last fall as President Barack Obama won election. This time, they hoped to jump-start an old cause: forging a path to citizenship for the estimated 12 million illegal immigrants living in the U.S.

Crowds were dampened in many areas though, as the swine flu scare kept numerous people home Friday. The area hardest hit by the swine flu is Mexico, also the native home of many rally participants.”

Bloomberg : French Unions Lead May Day Protests, Europe Marches

New York Times : Anger and Fear Fuel May Day Europe Protests

Associated Press : Immigrants push for reforms at rallies nationwide

“The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group wouldn’t budge on proposals to reduce Chrysler’s $6.9 billion in secured debt, according to the officials, who spoke on condition of anonymity because the filing plans are not public. Clearing those debts was a needed step for Chrysler restructure by the Thursday night deadline.

Bankruptcy doesn’t mean the nation’s third largest automaker will shut down. And the privately-held Chrysler is expected to sign a partnership agreement with the Italian company Fiat as early as Thursday as part of its restructuring plan. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company’s creditors would get.

President Barack Obama is expected to discuss the nation’s auto sector at noon Eastern.”

The New York Times reported late last night on the breakdown of negotiations between the Treasury Department and the minority holdout contingent, some 40 hedge funds that control only 30 percent of Chrysler’s debt :

“The battle over how to restructure Chrysler appeared likely to shift from closed-door conference rooms to a bankruptcy court on Thursday, as the carmaker and the Obama administration failed to win the near-unanimous consent they were seeking from Chrysler’s secured lenders.

If that happens, there could be a public brawl between the government, which is effectively propping Chrysler up with billions of dollars in loans, and a group of its recalcitrant lenders over who has claims to the company’s assets.

Many of the holdout lenders, primarily distressed-debt hedge funds who bought portions of Chrysler’s $6.9 billion of bank debt at a discount, are likely to argue that they have the first claim to the carmaker’s assets that were pledged for those loans, people briefed on the matter told DealBook.

They argue that they would see greater recovery in a liquidation of the car giant, which they contend would yield about 65 cents on the dollar. The most recent plan proposed Wednesday by the Treasury Department and Chrysler’s four main bank lenders — JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs — would have given the creditors about 33 cents on the dollar.

Because they hold ‘first lien’ debt, these creditors are at the front of the line to be repaid, and they have the first claim on the plants, equipment and brands that served as collateral to loans tied to Chrysler’s 2007 sale to Cerberus Capital Management.

These creditors hold a more senior position than the government holds for its Chrysler debt. Indeed, because so much of Chrysler’s collateral is already pledged out, the government is likely to provide debtor-in-possession financing to Chrysler on an unsecured basis, one of these people said.”

Associated Press : Chrysler to get up to $8B from govt for bankruptcy

New York Times : A Road Map to a Chrysler Bankruptcy

“The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.

The Commerce Department’s report, released Wednesday, dashed hopes that the recession’s grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.

Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.”

Most US news outlets focused almost exclusively on the 2.2 percent rise in consumer spending to achieve the positive spin preferred by American audiences, but the fact remains that the GDP numbers are the worst since Buddy Holly released “That’ll Be The Day”. The Daily Telegraph reports:

“The world’s largest economy has now shrunk by 3.3pc since its peak last year, making this the worst recession since the 1957-58 slump, when GDP fell by 3.8pc. In addition, it is the first time since the 1974-75 downturn that America has recorded third consecutive quarters of negative growth.”

Associated Press : Economy shrinks at 6.1 percent pace in 1Q

Daily Telegraph : US in worst recession for 50 years

“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

“The World Bank on Sunday urged donor nations to speed up delivery of the money they’ve already pledged — and to give even more — to help poor countries weather the steep global recession.

The bank said developing countries face especially serious consequences as the financial and economic crisis turns into what it described as a ‘human and development calamity.’

In a communique, the World Bank’s policy steering committee said the crisis has already driven more than 50 million people into extreme poverty, particularly women and children. ‘We must alleviate its impact on developing countries and facilitate their contribution to global recovery,’ the committee said.”

The AFP is reporting that Chinese officials could not resist another opportunity to poke fun at the US, even in the midst of a humanitarian crisis :

“Meanwhile, China called for reform of the global currency system, dominated by the dollar, which it said is the root cause of the crisis.

Chinese Vice Finance Minister Li Yong said the ‘flawed’ international monetary system is ‘a major defect in the current international economic governance structure.’”

Associated Press : World Bank: Nations should speed aid to poor

Agence France-Presse : World Bank, IMF say crisis becoming ‘human calamity’

“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

“The Folies Bergere opened at the Tropicana in 1959…the Tropicana’s owners, battling bankruptcy, announced they are closing the Folies for good.” CBS News

“Like nearly 60 percent of the people in Las Vegas with a mortgage, (Tanya Rucker) owes more than her house is worth.” CBS News

“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