I received the following in an email. The emboldening/color emphasis is his not mine. Information shows more rather than less banks on the verge of problems.
GOVERNMENT BANK AND MORTGAGE INSURERS HAVE DISCONCERTING FINANCIALS
CONCLUSION: The U.S. deficit/borrowing will be larger as taxpayers will fund these bank and mortgage insurers. I do not think either outlay is in budget.
“Agency’s(FDIC) deposits insurance fund stood at negative $20.7 billion at the end of the first quarter, a slight improvement from the end of 2009. NOTE,
that sentence was in print edition of WSJ, page C3, 21 May 2010 but not in internet edition story.
1) FDIC insurers ~$5,000 billion in bank deposits, yet reserves in a deficit. The total assets of loans of FDIC “problem” institution increased from $403 billion to $431 billion. Problem banks are now 775, or about 10% of all banks the FDIC insures. The FDIC has a $100 billion line of credit with the US Treasury.
2) Other government insurers: Fannie/Freddie /FHA insure/guarantee over $5,000 billion mortgages have combined losses of $145 billion over past 2-3 years, with loses well exceeding reported profits since privatized around 1967. Fannie/Freddie replaced a $400 billion credit limit with unlimited credit line with US Treasury 24 December 2009.
MAY 21, 2010 ‘Problem’ Banks Up to 775 The Wall Street Journal, page C3,By MICHAEL R. CRITTENDEN
FDIC Says Industry Posts Profit, but Loan Woes Persist WASHINGTON—The Federal Deposit Insurance Corp. listed a total of 775 banks, or roughly 10% of the U.S. industry, as “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets. Poor loan performance in other sectors continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said Thursday. There were 702 banks on the FDIC’s problem-bank list at the end of 2009 and 252 at the end of 2008. “The banking system still has many problems to work through, and we cannot ignore the possibility of more financial-market volatility,” FDIC Chairman Sheila Bair said.
Banks, squeezed by problem loans and continuing economic struggles, responded by reducing their lending. The industry’s total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without these accounting changes, lending would have declined for the seventh straight quarter.
“There is a lot of credit distress still in the mortgage-portfolio area,” FDIC Chief Economist Richard Brown said. FDIC officials said they saw some signs for optimism. The total $18 billion first-quarter profit reported by U.S. banks and thrifts was the highest since the first three months of 2008 and more than triple the profit recorded in the first quarter of ’09.
But failures continue to strain the FDIC’s fund to protect consumer deposits, although officials signaled they were confident they had enough cash on hand to deal with the expected spate of failures, without having to assess new fees on the banking industry.
Printed in The Wall Street Journal, page C3
FDIC Says Industry Posts Profit, but Loan Woes Persist WASHINGTON—The Federal Deposit Insurance Corp. listed a total of 775 banks, or roughly 10% of the U.S. industry, as “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets. Poor loan performance in other sectors continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said Thursday. There were 702 banks on the FDIC’s problem-bank list at the end of 2009 and 252 at the end of 2008. “The banking system still has many problems to work through, and we cannot ignore the possibility of more financial-market volatility,” FDIC Chairman Sheila Bair said.
Banks, squeezed by problem loans and continuing economic struggles, responded by reducing their lending. The industry’s total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without these accounting changes, lending would have declined for the seventh straight quarter.
“There is a lot of credit distress still in the mortgage-portfolio area,” FDIC Chief Economist Richard Brown said. FDIC officials said they saw some signs for optimism. The total $18 billion first-quarter profit reported by U.S. banks and thrifts was the highest since the first three months of 2008 and more than triple the profit recorded in the first quarter of ’09.
But failures continue to strain the FDIC’s fund to protect consumer deposits, although officials signaled they were confident they had enough cash on hand to deal with the expected spate of failures, without having to assess new fees on the banking industry.
Printed in The Wall Street Journal, page C3
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