by Calculated Risk on 11/14/2009 07:18:00 PM

Gretchen Morgenson at the NY Times writes about the tax loss carry-back¹ "gift" for home builders in the recently signed "Worker, Homeownership and Business Assistance Act of 2009": Home Builders (You Heard That Right) Get a Gift

The Center for Responsive Politics reports that through Oct. 26 of this year, home builders paid $6 million to their lobbyists. ... Much of this year’s lobbying expenditures were focused on arguing for the tax loss carry-forward, documents show.

Among individual companies, Lennar spent $240,000 lobbying while companies affiliated with Hovnanian Enterprises spent $222,000. Pulte Homes spent $210,000 this year.

That’s some return on investment. After spending its $210,000, Pulte will receive $450 million in refunds. And Hovnanian, after spending its $222,000, will get as much as $275 million.

That is quite a Return on Lobbying (ROL), although some of the money went to lobbying for the inefficient homebuyer tax credit.

And, oh, this "gift" will create few if any jobs.

¹ UPDATE: This is really a tax loss carry back to the profitable years.

by Calculated Risk on 11/14/2009 04:52:00 PM

From Barron's: Sam Zell: Too Soon for Dancing

Sam Zell ... said ... that the time isn't ripe because owners of office, retail and warehouse properties and their lenders are living in a dream world, believing that property prices will recover and vacancies will drop. ...

"Everybody is waiting for the Grave Dancer to come in, but at this point property owners won't tango," he told a gathering of prominent investors in downtown Chicago .

When Zell does start buying, he said, hotels are where he plans to play first ...

Zell has bought and sold CRE at the right time before.

However last year at the Milken Conference in Los Angeles, Zell thought CRE would be fine - from my notes:

Sam Zell started by saying we need to separate commercial from residential. Commercial will be fine in his view (not my view). ... Zell isn't talking about new construction (CRE), rather he is talking about prices for existing CRE. He feels there is too much global demand ("liquidity") for prices to fall too far - especially for Class-A buildings.

Watch what he does, not what he says!

by Calculated Risk on 11/14/2009 11:58:00 AM

The Pension Benefit Guaranty Corporation (PBGC) is the federal agency that guarantees pensions for 44 million Americans. The PBGC deficit doubled over the last six months to $22 billion ... but this is only just the beginning as the agency's potential exposure to future losses increased sharply.

From the Pension Benefit Guaranty Corporation (PBGC): PBGC Releases Annual Management Report for Fiscal Year 2009

The Pension Benefit Guaranty Corporation (PBGC) ended fiscal year 2009 with an overall deficit of $22 billion, according to the agency's Annual Management Report submitted to Congress today. The result compares with the $11.2 billion deficit recorded at the previous fiscal year-end on September 30, 2008.
...
The Annual Management Report classified 27 large pension plans with total underfunding of $1.64 billion as probable losses on the PBGC balance sheet. The report also shows that the agency's potential exposure to future pension losses from financially weak companies increased to about $168 billion from the $47 billion booked in fiscal year 2008.

"Exposure to possible future terminations means that we could face much higher deficits in the future," said Acting Director Vincent K. Snowbarger. "We won't fail to meet our obligations to retirees, but ultimately we will need a long-term solution to stabilize the pension insurance program."
emphasis added

With companies moving away from defined benefit plans, there will be fewer companies paying for insurance in the future - and the "long-term solution" will probably involve some sort of bailout.

by Calculated Risk on 11/14/2009 08:55:00 AM

This is amusing ...

From the Telegraph: FSA treats mortgage lenders like 'drug dealers', says CML chief

Hitting back at the idea that lenders are “evil” and reckless, [Council of Mortgage Lenders (CML) chief] Matthew Wyles said the industry should be allowed to treat its customers as adults, respecting their right to make their own decisions.

He said: “I have a sneaking suspicion that it’s the way that regulators see consumers – as wanton children who have a tendency to want what isn’t necessarily good for them, and for whom Nanny knows best.

“Increasingly, I also have the feeling that regulators see lenders and intermediaries as the sweetshop owners – or worse, the drug-dealers at the school gates – of the mortgage market, enticing innocent consumers in and then getting them hooked, for their own evil profit-driven purposes.”

Speaking at the CML’s conference, he said the FSA was at risk of creating “the kind of moral hazard it wishes to avoid”, by making consumers feel they need to take no responsibility for their own decisions.

Mr Wyles added that the purpose of regulation should be to provide a sensible operating framework between businesses and their customers.

“It should not attempt to wrap consumers in cotton wool and make borrowing risk-free. That is not the nature of lending, and it is not the nature of borrowing,” he said.

There is nothing in the FSA proposals that would make borrowing "risk-free". That is absurd. And the consumers would still be responsible for all their own decisions.

The proposals are aimed at full disclosure, and to protect consumers from, uh, "drug dealers".

by Calculated Risk on 11/14/2009 12:23:00 AM

When Pacific National Bank of San Clemente was closed by regulators Friday, the TARP lost $4.12 million (ht Matt Padilla). Last week the TARP lost $298.7 million when San Francisco-based United Commercial Bank (UCBH Holdings) failed.

It looks like TARP losses are becoming a trend ... and, oh, the cost to the FDIC Deposit Insurance Fund (DIF) for the three bank failures today is estimated to be almost $1 billion.

Here is the updated Unofficial Problem Bank List

And the quote of the day via the WSJ: State Finance Directors Warn of More Trouble Ahead

"I looked as hard as I could at how states could declare bankruptcy," said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. "I literally looked at the federal constitution to see if there was a way for states to return to territory status."

And in economic news, the trade deficit increased in September. The major contributors to the increase were higher oil prices and more imports from China. Also - since the deficit was higher than expected - Q3 GDP will probably be revised down.

by Calculated Risk on 11/13/2009 09:30:00 PM

Note: This was before the three FDIC bank seizures today.

This is an unofficial list of Problem Banks.

Changes and comments from surferdude808:

The Unofficial Problem Bank List changed by a net two institutions this week to 507.

Seven institutions with assets of $1.6 billion were added to the list. The largest addition is First Federal Bank of North Florida, Palatka, FL ($444 million). The OCC did not release its actions for October today so we will look for those additions next week.

Assets on the list fell substantially from $330 billion to $304 billion as $13.2 billion of the decline came from the three failures last week -- United Commercial Bank ($12.8 billion), Prosperan Bank ($197 million), and Home Federal Savings Bank ($14 million) – and 2 banks that underwent unassisted mergers during July -- Discovery Bank ($151 million), and Southern Bank of Commerce ($30 million).

The list has been updated to include asset figures for the third quarter of 2009, which accounted for $14.5 billion of the decline in assets from last week. The largest decline in assets during the quarter occurred at AmTrust Bank (down $1.7 billion) and Woodlands Commercial Bank (down $1 billion). The average decline in assets during the quarter was $29 million but the median decline was only $4.5 million.

Positively, 368 institutions reduced their asset size during the quarter.

The only other changes to the list are the issuance of Prompt Corrective Action orders against three institutions that are already under a formal enforcement action. These PCA order were issued against Evergreen Bank, New South Federal Savings Bank, and Orion Bank (CR Note: Orion failed today!).

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 11/13/2009 08:08:00 PM

Near the waters edge
Sun sets on Pacific Coast
A bank, drowned by debt
by Soylent Green is People
From the FDIC: Sunwest Bank, Tustin, California, Assumes All of the Deposits of Pacific Coast National Bank, San Clemente, California

Pacific Coast National Bank, San Clemente, California, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of August 31, 2009, Pacific Coast National Bank had total assets of $134.4 million and total deposits of approximately $130.9 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $27.4 million. ... Pacific Coast National Bank is the 123rd FDIC-insured institution to fail in the nation this year, and the fifteenth in California. The last FDIC-insured institution closed in the state was United Commercial Bank, San Francisco, on November 6, 2009.

That makes three today ...

by Calculated Risk on 11/13/2009 06:08:00 PM

Suited Bureaucrats
Waiting for critical mass
Century flames out

What is that white light?
Orion Supernovas
Hot money burns bright
by Soylent Green is People
From the FDIC: IBERIABANK, Lafayette, Louisiana, Assumes All of the Deposits of Century Bank, Federal Savings Bank, Sarasota, Florida

Century Bank, Federal Savings Bank, Sarasota, Florida, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of October 31, 2009, Century Bank, FSB had total assets of $728 million and total deposits of approximately $631 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $344 million. ... Century Bank, FSB is the 121st FDIC-insured institution to fail in the nation this year, and the tenth in Florida. The last FDIC-insured institution closed in the state was Flagship National Bank, Bradenton, on November 6, 2009.

From the FDIC: IBERIABANK, Lafayette, Louisiana, Assumes All of the Deposits of Orion Bank, Naples, Florida

Orion Bank, Naples, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of October 31, 2009, Orion Bank had total assets of $2.7 billion and total deposits of approximately $2.1 billion. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $615 million. ... Orion Bank is the 122nd FDIC-insured institution to fail in the nation this year, and the eleventh in Florida. The last FDIC-insured institution closed in the state was Century Bank, Sarasota, FL, earlier today.

by Calculated Risk on 11/13/2009 05:07:00 PM

From the WSJ: State Finance Directors Warn of More Trouble Ahead

"I looked as hard as I could at how states could declare bankruptcy," said Michael Genest, director of the California Department of Finance who is stepping down at the end of the year. "I literally looked at the federal constitution to see if there was a way for states to return to territory status."

And on banks:

From the Chicago Tribune: Amcore says regulators reject plan to raise capital (ht Doug)

Last month, Amcore ... disclosed it was "undercapitalized or significantly undercapitalized under some regulatory capital standards."

On Nov. 6, the Federal Reserve Bank of Chicago also notified Amcore that it found its capital plan unacceptable.

Amcore said it's continuing to work with its financial and professional advisors in seeking outside capital, and in complying with the regulators' orders, but "there can be no assurance that these actions will be successful."

It also conceded that it could get seized by regulators.

"Failure to submit an acceptable capital restoration plan or disposition plan or to restore capital levels may result in additional enforcement actions by the regulators, including the appointment of a receiver," it said.

Amcore has $4.9 billion in assets.

And there is plenty of noise down in Florida tonight, from the Florida Business Journal BankUnited CEO: Big deal is coming

BankUnited CEO John Kanas told members of the Greater Miami Chamber of Commerce during a luncheon Tuesday that they should expect a big deal by his bank in the next week.

And also: Texas billionaire Beal seeks failed Florida bank (ht Stephen)

Federal regulators have granted Texas billionaire and financial executive Andrew Beal approval to form a bank that could acquire a failed or failing Florida bank.
...
All of these players have plenty of problem banks from which to choose. On June 30, there were 15 undercapitalized banks in Florida, including Fort Pierce-based Riverside National Bank, Naples-based Orion Bank, Panama City-based Peoples First Community Bank, Immokalee-based Florida Community Bank and Sarasota-based Century Bank.

by Calculated Risk on 11/13/2009 03:32:00 PM

A couple of banks in trouble ...

From Reuters: US credit card issuer Advanta files for bankruptcy (ht jb)

The company also said its Advanta Bank's capital is below regulatory requirements and that the bank could turned over to a Federal Deposit Insurance Corp receivership.

Advanta said it decided not to fund the bank's capital shortfall to preserve value for other stakeholders.
emphasis added

Advanta bank has just under $3 billion in assets.

And from SignonSanDiego: Imperial Capital hits deadline to raise capital

The regulator-imposed deadline has passed for La Jolla's Imperial Capital Bank to raise additional capital, putting into question the future of the long-struggling institution.
...
Federal regulators first placed Imperial Capital under a cease-and-desist order in February. As part of that, the bank was required to submit a plan to raise additional capital.

The bank submitted its plan in August, but regulators rejected it and set yesterday as a deadline for the bank to sell stock to raise money or find a buyer.

Inperial has about $4.2 billion in assets, and has also received a Prompt Corrective Action from the FDIC:

On October 15, 2009, Imperial Capital Bank (the "Bank"), a wholly owned subsidiary of Imperial Capital Bancorp, Inc. (the "Company"), received a Supervisory Prompt Corrective Action Directive (the "Directive") from the Federal Deposit Insurance Corporation (the "FDIC").

A Prompt Corrective Action Directive is basically a "Hail Mary pass" and frequently means failure is imminent (though not always).