Regulators seized five banks in Florida, Missouri, New Mexico, Oregon and Washington, lifting the total number of failures this year to nine as financial institutions struggle with loan defaults and a weak economy.
Two of the five institutions had assets of more than $1 billion. The Florida bank, in Miami, was sold to an investment group that includes former North Fork Bancorp Chief Financial Officer Dan Healy. The deposits and assets of the New Mexico bank went to Texas billionaire Andrew Beal.
The Federal Deposit Insurance Corp. estimated the Friday closings will cost the agency’s cash-strapped deposit-insurance fund a total of $531.7 million.
Since 2008, regulators have shut down 174 banks, and the expectation is that failures will continue to accelerate in 2010 amid heightened regulatory scrutiny. FDIC Chair Sheila Bair has predicted that failures will “peak” this year and then “subside.”
Is Bob Chapman of the International Forecaster correct when he says that his sources state that there are actually 2,035 banks in trouble and that in 2010, he expects between 2500 and 3000 bank failures? (See below post for audio.) Is he also correct when he states that this will cost the FDIC some $800 Billion to $1 Trillion dollars? What about that $800 Billion that Fannie and Freddie supposedly need? I’m still searching for confirmation of those exact numbers.
The Federal Deposit Insurance Corp. in the next year plans to add more than 1,600 staffers, mostly to handle bank failures, and is pushing its budget up 35% as the number of tottering banks climbs.
More than 130 banks have failed this year, and the agency’s inventory of assets in liquidation has more than doubled from the beginning of the year to $36.8 billion through the end of November. The FDIC has also agreed to share future losses on the assets of more than 80 failed banks, representing $108 billion in additional exposure.
In the agency’s 2010 operating budget, released Tuesday, the FDIC would spend $2.5 billion to fund its bank failure operations out of a total budget of $4 billion. The agency’s entire operating budget for 2009 was roughly $2.6 billion.
“It will ensure that we are prepared to handle an even larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions,” FDIC Chairman Sheila Bair said in a statement.
In addition to expecting bank failures to increase, the FDIC said it expects the number of banks at risk of failing to rise in 2010. The FDIC has twice this year demanded banks pay billions in additional fees in order to keep its deposit-insurance fund solvent.
Regulators give banks a secret rating of 1 through 5 as a measurement of their health. Banks with a 1 rating are considered the healthiest.
“The number of 3-, 4- and 5-rated institutions has increased by over 80% thus far during 2009 and is expected to continue to increase next year,” the FDIC said. The forecast could mean further increases to the FDIC’s “problem list” of troubled banks, which stood at 552 at the end of the third quarter. (emphasis mine)