bank run blog

While we are likely to never know what happened to all of the tax dollars that have been and will be TARPed away by the private owners of financial institutions that have received handouts in the past months, limited government reporting reveals the gallery of deadbeats and which private companies are getting the largest portion of federal government support to be able to claim (with no intended irony) that they are private companies operating in the beautiful and almighty free market.

Here is a report form the Treasury Department that provides a smidgen of detail regarding the use of your tax dollars, particularly interesting is the Transaction Report : Capital Purchase Program on page 8, and the TARP Administrative Expenses report ($26.5 million projected expenses). This report covers only December 2008.

Here is a listing provided by the New York Times (via Bloomberg) that gives the astronomical broad numbers per institution, which was published January 28.

The Federal Deposit Insurance Corporation announced that it has closed the Main Street Bank of Northville, Michigan with the Michigan Office of Financial and Insurance Regulation, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC said in a release;

“Monroe Bank & Trust has agreed to pay a total premium of 1 percent for the failed bank’s deposits. In addition, Monroe Bank & Trust will purchase approximately $16.9 million of Main Street’s assets, and have a 90-day option to purchase approximately $1.1 million in premises and fixed assets. The FDIC will retain the remaining assets for later disposition.”

Main Street Bank had total assets of $98 million in total assets and $86 million in total deposits as of October 7, 2008. The cost for paying insurance claims on the bank’s deposits is estimated by the FDIC to be between $33 million and $39 million. The agency said, “Monroe Bank & Trusts’ acquisition of all deposits was the “least costly” resolution for the FDIC’s Deposit Insurance Fund.”

Main Street Bank is the fifteenth bank to fail this year.

see resources-
FDIC Failed Bank Information web site : Monroe Bank & Trust Acquires All the Deposits of Main Street Bank, Northville, Michigan
Market Watch : Main Street Bank of Northville, Mich. fails, 14th of year

The Federal Deposit Insurance Corporation announced that it has taken the Silver State Bank of Henderson, NV into receivership in cooperation with the Nevada Financial Institutions Division after business hours yesterday. The FDIC said in a release;

“To protect the depositors, the FDIC entered into a Purchase and Assumption Agreement with Nevada State Bank, Las Vegas, Nevada, to assume the Insured Deposits of Silver State Bank.”

Branches of Silver State Bank will re-open on Monday as Nevada State Bank in Nevada and National Bank of Arizona in Arizona. The FDIC said, “Depositors of the failed bank will automatically become depositors of Nevada State Bank or National Bank of Arizona…Nevada State Bank agreed to purchase the (failed bank’s) insured deposits for a premium of 1.3 percent.”

Silver State Bank had assets of $2.0 billion and total deposits of $1.7 billion. At the time of closing, there were approximately $20 million in uninsured deposits held in approximately 500 accounts that potentially exceeded the insurance limits.

The FDIC said in its release;

“The transaction is the least costly resolution option, and the FDIC estimates that the cost to its Deposit Insurance Fund is between $450 and $550 million. Silver State Bank is the second bank to fail in Nevada in 2008. First National Bank of Nevada, Reno failed on July 25, 2008. This year, a total of eleven FDIC-insured institutions have been closed.”

The Washington Post noted in its reporting of the Silver State failure;

“Andrew K. McCain, a son of Republican presidential nominee John McCain, sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing “personal reasons,” corporate filings with the Securities and Exchange Commission show. Andrew McCain also was a member of the bank’s audit committee, responsible for oversight of the company’s accounting.”

see sources-

FDIC Failed Bank Information page
Washington Post : Silver State Bank in Nevada is shut

Things got a little heated in California this morning, as IndyMac continues to unwind. According to the Associated Press, and scores of local media outlets : Customers furious in Day 2 of IndyMac fed takeover :

“Police ordered angry customers lined up outside an IndyMac Bank branch to remain calm or face arrest Tuesday as they tried to pull their money on the second day of the failed institution’s federal takeover.

At least three police squad cars showed up early Tuesday as tensions rose outside the San Fernando Valley branch of Pasadena-based IndyMac.”

It just keeps getting worse for the now federally owned bank. MarketWatch is reporting that a class action lawsuit alleging financial fraud has been filed in US District Court :

“The complaint charges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. As alleged, Defendants knew but misrepresented the true extent of IndyMac’s losses in its loan portfolio, including adjustable-rate mortgages and homebuilder construction loans, and IndyMac’s inadequate capital position.”

Associated Press : Customers furious in Day 2 of IndyMac fed takeover

MarketWatch : Attention IndyMac Bancorp, Inc. Common and Preferred Shareholders and Preferred Unitholders: Law Offices Bernard M. Gross, P.C. Filed Lawsuit

After the week long institutional “silent” bank run on IndyMac, yesterday individual depositors attempted to get their cash out of the failed bank in what is likely to be the first in a run of bank runs.

In this segment, CNBC reports on the IndyMac bank run and identifies several additional banks that teeter dangerously on the precipice of failure with significantly lopsided ratios of non-performing loans to cash reserves held by the banks;

“Ten banks fall into that category, including Downey Financial with a ratio of 95 percent, followed by Doral, BFC, Bank United and Corus.” - Jane Wells, CNBC

This video taken by a bystander as customers waited to retreive their funds from IndyMac provides a man-on-the-street view of a bank run on America’s second largest mortgage lender;