by Calculated Risk on 7/20/2009 01:32:00 PM

From Atlanta Fed President Dennis Lockhart: On the Economic Outlook and the Commitment to Price Stability . Here is Lockhart's economic outlook:

Often a deep recession is followed by a sharp rebound in business and overall economic activity. Unfortunately, as I look ahead, I do not foresee this trajectory. I expect real growth to resume in the second half and progress at a modest pace. I do not see a strong recovery in the medium term.

There are risks to even this rather subdued forecast. The risk I'm watching most closely is commercial real estate. There is a heavy schedule of commercial real estate financings coming due in 2009, 2010, and 2011. The CMBS (commercial real estate mortgage-backed securities) market is very weak, and banks generally have no appetite to roll over loans on properties that have lost value in the recession. Refinancing problems will not directly affect GDP—it's commercial construction that factors into GDP—but I'm concerned problems in commercial real estate finance could adversely affect the otherwise improving banking and insurance sectors.

... the healing of the banking system will take time. Working off excess housing inventory will take time. The reallocation of labor to productive and growing sectors of the economy will take time. It will take time to complete the deleveraging of American households and the restoration of consumer balance sheets.

In short, I believe the economy must undergo significant structural adjustments. We're coming out of a severe recession, and it's not too much an exaggeration to say the economy is undergoing a makeover. We must build a more solid foundation for our economy than consumer spending fueled by excessive credit—excessive household leverage—built on a house price bubble.

The surviving financial system must find a new posture of risk taking. The balance of consumption and investment must adjust, with investment being financed by greater domestic saving. The distribution of employment must adjust to match worker skills, including newly acquired skills, with jobs in growth markets. Some industrial plant and equipment must be taken offline to remove excess and higher-cost capacity.

As I said, these adjustments will take time and will suppress growth prospects in the process. I believe the economy will underperform its long-term potential for a while because of the obstacles to growth that must be removed, adjustments it must undergo.
...
Let me summarize my argument here today. The economy is stabilizing and recovery will begin in the second half. The recovery will be weak compared with historic recoveries from recession. The recovery will be weak because the economy must make structural adjustments before the healthiest possible rate of growth can be achieved. While this adjustment process is going on in the medium term, I believe inflation and deflation are roughly equal risks and require careful monitoring. Slack in the economy will suppress inflation. And inflation is unlikely to result—by direct causation—from the recent growth of the Fed's balance sheet. In any event, the Fed has a number of tools being readied to unwind the policies used to fight the recession, and it will be some time before their use is appropriate.
emphasis added

by Calculated Risk on 7/20/2009 12:21:00 PM

From Dow Jones: Moody's: Commercial Real-Estate Prices Fall 7.6% In May

Commercial real-estate prices fell 7.6% in May ... The indexes are down 29% from a year ago and 35% from their October 2007 peak.

According to Moody's, CRE prices fell in 8.6% in April (about 16% in two months).

Talk about cliff diving!

by Calculated Risk on 7/20/2009 09:56:00 AM

From the Conference Board:

The Conference Board Leading Economic Index™ (LEI) for the U.S. increased 0.7 percent, The Conference Board Coincident Economic Index™ (CEI) decreased 0.2 percent ... The Conference Board LEI for the U.S. has risen for three consecutive months now ... With these large and widespread gains, its six month growth has picked up to the highest rate since the first quarter of 2006. Meanwhile, The Conference Board CEI for the U.S., measuring current economic activity, remains on a downtrend, but the pace of its decline has moderated somewhat in recent months. All in all, the behavior of the composite indexes suggest that the recession will continue to ease and that the economy may begin to recover in the near term.

This isn't something I follow very closely, but I'm curious to see when (or if) they try to call the end of the recession. The Conference Board was still saying "sluggish economic growth will likely continue in the near term" even after the recession started - so this might not be useful for turning points.

by Calculated Risk on 7/20/2009 08:13:00 AM

From Lingling Wei and Maurice Tamman at the WSJ: Commercial Loans Failing at Rapid Pace

U.S. banks have been charging off soured commercial mortgages at the fastest pace in nearly 20 years ... losses on loans used to finance offices, shopping malls, hotels, apartments and other commercial property could reach about $30 billion by the end of 2009.
...
Many of the most troubled [regional] banks have heavy exposure to commercial real estate. ...

In contrast to home loans, the majority of which were made by about 10 lenders, thousands of U.S. banks, especially regional and community banks, loaded up on commercial-property debt.
...
Some analysts, meanwhile, worry that banks aren't sufficiently recognizing losses on their commercial real-estate loans, thereby exposing themselves to bigger losses later. ..."Net charge-offs to date have been highly inadequate," said Richard Parkus, head of commercial mortgage-backed securities research at Deutsche Bank. "This is clearly a problem that is being pushed out into the future."

Many regional and community banks had excessive loan concentrations in Construction & Development (C&D) and CRE loans. The FDIC identified this as an emerging risk in 2006 - so it is no surprise. These smaller banks have been slow to recognize the related losses - possibly because many of the deals had interest reserves that mask the performance of the commercial building until the reserve runs dry. Then there is just more work for the FDIC ...

by Calculated Risk on 7/19/2009 11:58:00 PM

“I had people calling me crying, and we were telling them, ‘You can pay me or you can lose your house. People were giving me every dime they had, opening credit cards. But I never saw one client come out of it with a successful loan modification.”
Paul Pejman, a former sales agent for FedMod in Irvine, Calif

That quote is from Peter Goodman's article in the NY Times about ex-mortgage brokers now offering loan modifications: Cashing In, Again, on Risky Mortgages

Goodman mentions this interesting tidbit that Jillayne (at CEForward and RainCityGuide) had previously told me about:

The California Department of Real Estate warns consumers that many dubious loan modification companies have organized themselves as law firms solely to allow them to collect upfront fees, even though the lawyers have little, if anything, to do with the services provided. The department cautions consumers against hiring such companies.

by Calculated Risk on 7/19/2009 09:11:00 PM

UPDATE, Deal Approved by Board: From the NY Times CIT Is Said to Obtain Urgent Loan to Prevent Bankruptcy (ht Basel Too)

Directors of the CIT Group, one of the nation’s leading lenders to small and midsize businesses, approved a deal Sunday evening with some of the bank’s major bondholders to help it avert a bankruptcy filing through a $3 billion emergency loan ...

From Reuters: CIT bondholder plan backed by unsecuritized assets (ht jb)

"The $3 billion is new money but securitized by all the remaining unsecuritized assets which probably exceed $10 billion," the source said.

A few points:

This is new debt at a reported 10% plus LIBOR rate. This is not debt for equity. This is essentially a bridge loan, with a reported 2 1/2 year term.

This deal hasn't has received CIT Board approval (UPDATE Above: Deal Approved).

This new debt is apparently secured by all the remaining unsecured assets of CIT. This probably means CIT will survive through 2009 (if approved), but long term debt holders will be behind this debt.

The parties are trying to negotiate a debt-for-equity swap, and that would probably seriously dilute current shareholders.

This doesn't solve the problem, just kicks the can down the road.

Other story links:
WSJ broke the story: Bondholders Plan CIT Rescue

NY Times: CIT Is Near Deal for $3 Billion Loan to Avert Bankruptcy

by Calculated Risk on 7/19/2009 05:52:00 PM

From the WSJ: CIT cuts deal with key bondholders for $3 billion in financing. CIT will avoid bankruptcy, restructure outside court. (ht Noah at UrbanDigs in NY)

UPDATE: From WSJ: Bondholders Plan CIT Rescue

The deal, which was being considered by CIT's board Sunday night, charges CIT very high interest rates, and it doesn't permanently fix the company's long-term financing needs ... Under the proposal, CIT would likely pay interest rates 10 percentage points above the London interbank offered rate, said these people. ... CIT has also agreed to pledge some of its highest-quality loans as collateral on the $3 billion package.

The new loan could act like a "bridge" to a series of debt-exchange offers that CIT would launch in order to get bondholders to swap some of their bonds for equity in the company or for new debt that matures later.

So it is a bridge loan while CIT tries for a debt-for-equity exchange or new debt. This is a short term fix, but probably gets CIT through the year.

by Calculated Risk on 7/19/2009 03:10:00 PM

From the Sacramento Business Journal: Office vacancies piling up (ht Brad)

Office vacancies in Sacramento continue to rise as new buildings come online while many businesses are retrenching or closing altogether.

During the second quarter, local office vacancy surged to [a record] 20.9 percent ...

Brokers say these lowlights reflect the clash between today’s economic uncertainty and the confidence of the past, as large new buildings planned years ago are being completed just as companies hit by the recession are hunkering down, getting leaner or closing down.

While conditions would appear dreary even without new construction, the completion of major office projects is compounding the problem.

“You’ve got very significant new buildings being added to the base,” said Cornish & Carey managing partner John Frisch ...

Companies are "hunkering down, getting leaner or closing down" and giving up office (negative absorption) just as long planned new space comes online. This is pushing up vacancy rates, and pushing down rents. The article mentions suburban Class B office lease rates are back to levels last seen in the 1980s.

I posted the following nationwide graph a few months ago based on CoStar's The State of the Commercial Real Estate Industry: 2008 Review/2009 Outlook (no link). This shows that 2009 will be the peak office space delivery year for this cycle.

Click on graph for larger image in new window.

This graph graph shows the amount of office space delivered per year in the U.S. in millions of square feet since 1958. The over investment during the '80s (S&L crisis) is obvious, as is the office boom during the stock bubble.

The red columns are based on projections from Costar for projects already in the pipeline. Although deliveries will be strong in 2009 (with all the projects currently under construction), CoStar projects new office deliveries in 2010 will the lowest since 1996, and deliveries in 2011 will be the lowest in over 50 years.

by Calculated Risk on 7/19/2009 12:19:00 PM

The FDIC closed four more banks on Friday, and the following graph shows bank failures by week for 2009.

Click on graph for larger image in new window.

So far there have been 57 FDIC bank failures in 2009.

It appears there will be close to 100 bank failures this year.

Note: Week 1 ends Jan 9th.

This is nothing compared to the S&L crisis. There were 28 weeks during the S&L crisis when regulators closed 10 or more banks, and the peak was April 20, 1989 with 60 bank closures (there were 7 separate weeks with more than 30 closures in the late '80s and early '90s).

The second graph covers the entire FDIC period (annually since 1934).

Back in the '80s, there was some minor multiple counting ... as an example, when First City of Texas failed on Oct 30, 1992 there were 18 different banks closed by the FDIC. This multiple counting was minor, and there were far more bank failures in the late '80s and early '90s than this year.

The third graph includes the 1920s and shows that failures during the S&L crisis were far less than during the '20s and early '30s (before the FDIC was enacted).

Note how small the S&L crisis appears on this graph with the change in they-axis! The number of bank failures soared to 4000 (estimated) in 1933.

During the Roaring '20s, 500 bank failures per year was common - even with a booming economy - with depositors typically losing 30% to 40% of their bank deposits in the failed institutions. No wonder even the rumor of a problem caused a run on the bank!

Of course the number of banks isn't the only measure. Many banks today have more branches, and far more assets and deposits.

The FDIC era source data is here - including by assets (in most cases) - under Failures and Assistance Transactions

The pre-FDIC data is here.

by Calculated Risk on 7/19/2009 09:31:00 AM

Not much news on CIT ...

From Bloomberg: CIT Group’s Banks Said to Weigh Bankruptcy Financing

CIT Group Inc. advisers, including JPMorgan Chase & Co. and Morgan Stanley, are discussing options for funding the lender if it enters bankruptcy, people with knowledge of the matter said.
...
“This thing doesn’t have a future,” CreditSights analyst David Hendler said yesterday in a telephone interview. “Anything is possible but the problem is not solvable anymore. They’re just in denial it’s finally over,”

From Bloomberg: Alabama Hardware Distributor Blames CIT Woes for Its Bankruptcy

A hardware distributor in Alabama became the first company to blame the troubles of commercial lender CIT Group Inc. for its bankruptcy yesterday when it filed for protection from creditors.

From WSJ Real Time Economics: CIT’s Customers Issue an Urgent Request

Thirty-two trade groups, in an unusual display of unity, pleaded in a letter on Friday night for the Obama administration to reverse its decision and extend aid to the beleaguered small-business lender CIT Group Inc ...

From the letter:

Dear Secretary Geithner:

As the U.S. and world economies struggle to recover from the most devastating recession in recent memory, we are writing to impress upon you the very severe ramifications that a CIT bankruptcy would have on more than one million small- and medium-sized businesses, their partners in the U.S. retail industry and the manufacturers and service providers that supply that sector. Our organizations represent thousands of these small- and medium-sized enterprises and their suppliers as well as the most significant retail operations in this country. We urge the government to reconsider every possible option to address the current stresses confronting CIT and to prevent further tightening of the credit markets.

... Without CIT, thousands of retailers may be forced out of business because their suppliers will be put out of business. Such a ripple effect could set back the recovery of the manufacturing and retail sectors, and therefore the U.S. economy, by several years. CIT is one of the leading factoring companies in the United States and is a vital source of financing for manufacturers as well as the small and medium-sized vendors who are the primary suppliers of merchandise sold in U.S. retail establishments. Because of CIT’s primacy in this field, they have essentially become the banker to “Main Street”, and as such, it is absolutely essential for the government to utilize every tool at its disposal to prevent a CIT bankruptcy.

Uncertainties over CIT have already provoked a credit squeeze that threatens payments and payrolls in thousands of businesses. As this uncertainty persists, and if CIT is forced to undertake a bankruptcy filing, the ripple effect will be felt in every city and state across this country as the further tightening of credit markets will make it incredibly difficult, if not impossible, for many of the companies who currently rely on CIT for financing to remain in business. The number of jobs that depend on the successful outcome of the CIT crisis is immeasurable.

by Calculated Risk on 7/18/2009 10:10:00 PM

From Roger Vincent at the LA Times: Commercial brokers are swimming in empty space

Nearly 16% of office space in Los Angeles County is sitting vacant as tenants close up shop or move out of expensive properties. Nearly a third of the space around up-market Playa Vista sits empty; office buildings in the Inland Empire and parts of Orange County are completely vacant.

It all adds up to less work for brokers like [Carl] Muhlstein, who make their living facilitating the sale and leasing of these properties.

And some recent national CRE data:

Strip Mall Vacancy Rate Hits 10%, Highest Since 1992

U.S. Office Vacancy Rate Hits 15.9% in Q2

Hotel Occupancy Off 19% Compared to 2007

Apartment Vacancy Rate at 22 Year High

by Calculated Risk on 7/18/2009 05:29:00 PM

For the last few years, whenever housing starts increased, I wrote that was bad news because there was already too much inventory.

Now, even though there is still too much existing home inventory, and too much new home inventory in some areas, it appears that new home sales have stabilized. Since single family housing starts (built for sale) have been below new home sales for six consecutive quarters (through Q1), this suggests single family housing starts should also bottom soon. There is a good chance that has already happened.

Why is that good if there is still too much housing inventory overall?

This increase in starts means that the drag from Residential Investment will slow or stop, and also that residential construction employment is close to the bottom. Residential investment has been a drag on the economy for 14 straight quarters, and just removing that drag will seem like a positive.

And residential construction has lost jobs for several years, and even though construction employment will probably not increase significantly, not losing jobs will also seem like a positive.

This removes drags from the economy - and that is the little bit of good news.

To be clear, this is not great news for the homebuilders. It will take some time to work off all the excess inventory, so new home sales and single family housing starts will probably stay low for some time. And it is possible that new home sales and housing starts could still fall further.

Are new home sales actually below single family starts (built for sale)?

Monthly housing starts (single family starts) cannot be compared directly to new home sales, because the monthly housing starts report from the Census Bureau includes apartments, owner built units and condos that are not included in the new home sales report.

However it is possible to compare "Single Family Starts, Built for Sale", from the Census Bureau's "Quarterly Starts and Completions by Purpose and Design" to New Home sales on a quarterly basis.

The quarterly report shows that there were 52,000 single family starts, built for sale, in Q1 2009 and that is less than the 87,000 new homes sold for the same period. This data is Not Seasonally Adjusted (NSA). This suggests homebuilders are selling more homes than they are starting.

Note: new home sales are reported when contracts are signed, so it is appropriate to compare sales to starts (as opposed to completions), although this is not perfect because homebuilders have recently been stuck with “unintentional spec homes” because of the high cancellation rates. However cancellation rates for most homebuilders have fallen sharply recently.

Click on graph for larger image in new window.

This graph provides a quarterly comparison of housing starts and new home sales. In 2005, and most of 2006, starts were higher than sales, and inventories of new homes rose sharply. For the last six quarters, starts have been below sales – and new home inventories have been falling.

What is Residential Investment?

Residential investment is a major investment category reported by the Bureau of Economic Analysis (BEA) as part of the GDP report.

Residential investment, according to the BEA, includes new single family structures, multifamily structures, home improvement, broker's commissions, and a few minor categories.

This graph shows the various components of RI as a percent of GDP for the last 50 years. The most important components are investment in single family structures and home improvement.

Investment in home improvement was at a $162.3 billion Seasonally Adjusted Annual Rate (SAAR) in Q1, significantly above investment in single family structures of $113.7 billion (SAAR).

Let's take a closer look at investment in single family structures (usually the largest category):

As everyone knows, investment in single family structures has fallen off a cliff. This is the component of RI that gets all the media attention - although usually from stories about single family starts and new home sales.

In Q1, investment in single family structures was at 0.8% of GDP, significantly below the average of the last 50 years of 2.35% - and also below the previous record low in 1982 of 1.20%.

Based on the housing starts report, investment in single family structures will probably increase in Q2 for the first time since Q1 2006. This doesn't guarantee that residential investment increased in Q2, because home improvement and the other categories might offset the gains in single family structure investment, but most of the drag on GDP should be gone.

by Calculated Risk on 7/18/2009 03:19:00 PM

I'm working on a housing start post, but first ...

Barry Ritholtz presents the following graph and asks:

"I cannot figure out why people continue to call for a bottom in Real Estate — as if there is going to be this snap back any day now."

Well I'm one of the people who wrote yesterday that a bottom for single family housing starts might have happened:

It now appears that single family starts might have bottomed in January.

A few quick points:

If single family housing starts bottomed in January, on a seasonally adjusted annual rate (SAAR) basis, the 12 month moving average of unadjusted data won't bottom until October or so (depending on the shape of the recovery). Using this method adds a lag to the analysis.

Barry also conflates calling a bottom in housing starts with: 1) "a bottom in Real Estate" and 2) "a snap back".

First, there will probably be two bottoms for Residential Real Estate. The first will be for new home sales, housing starts and residential investment. The second bottom will be for prices. For more on this, see: More on Housing Bottoms

Most people think prices when they hear the word "bottom", and the bottom for prices usually trails the bottom for housing starts - sometimes the two bottoms can happen years apart!

Second, looking for a bottom in housing starts doesn't imply "a snap back" in activity. As I noted yesterday, "I expect starts to remain at fairly low levels for some time as the excess inventory is worked off."

I'll have more on why the housing start report is somewhat good news soon.

by Calculated Risk on 7/18/2009 10:53:00 AM

Here is a graph from Jan Hatzius at Goldman Sachs (no link):

Click on graph for larger image in new window.

The graph shows the end of cliff diving for retail sales, auto sales, home sales, and capital goods orders - but so far no recovery.

But GDP can still turn slightly positive.

Here is a speech from San Francisco Fed President Janet Yellen in March: The Uncertain Economic Outlook and the Policy Responses.

[I]t takes less than many people think for real GDP growth rates to turn positive. Just the elimination of drags on growth can do it. For example, residential construction has been declining for several years, subtracting about 1 percentage point from real GDP growth. Even if this spending were only to stabilize at today’s very low levels—not a robust performance at all—a 1 percentage point subtraction from growth would convert into a zero, boosting overall growth by 1 percentage point. A decline in the pace of inventory liquidation is another factor that could contribute to a pickup in growth. Inventory liquidation over the last few months has been unusually severe, especially in motor vehicles—a typical recession pattern. All it would take is a reduction in the pace of liquidation—not outright inventory building—to raise the GDP growth rate.
emphasis added

This is a very important point for forecasters - to distinguish between growth rates and levels. Even if the economy has bottomed, it is at a very low level compared to the last few years, and the recovery will probably be very sluggish.

by Calculated Risk on 7/18/2009 08:38:00 AM

Jim the Realtor takes us on a tour of the 679-unit Vantage Point complex in downtown San Diego. "They had been taking $25,000 deposits since 2004, but could only generate around 200 sales - not enough to qualify for Fannie/Freddie financing (need 70% pre-sold)."

Jim says the developer has returned the deposits, converted a part of the building to apartments - and is now to trying to sell again at a lower price - that Jim thinks is still too high.

Note: these new high rise condos aren't included as inventory by either the Census Bureau (new homes) or the NAR (existng homes).

Here is some info on the condo lending rules from the WSJ on June 22nd: Changes Urged to Rules on Condo Loans

In March, Fannie Mae said it would no longer guarantee mortgages on condos in buildings where fewer than 70% of the units have been sold, up from 51%. Fannie Mae also won't purchase mortgages in buildings where 15% of owners are delinquent on condo association dues or where one owner has more than 10% of units, which the firm sees as signals that a building could run into financial trouble. Freddie Mac will implement similar policies next month.
...
Fannie Mae officials say the new rules haven't been as taxing as some claim. The mortgage company said the 70% rule doesn't apply to loan applications submitted through an underwriting program used by major lenders, and that hundreds of projects submitted through that program since March 1 have been approved even though their sales levels are below 70%. Developers are also able to apply for exemptions to the new policies for loans that are manually underwritten.
...
Fannie and Freddie have also boosted fees on mortgages for condos. Buyers without a minimum 25% down payment have to pay closing-cost fees equal to 0.75% of their loan, regardless of their credit score, under new rules that took effect in April. Fannie has said it will drop that fee in August for cooperative apartments and detached condos.

by Calculated Risk on 7/18/2009 12:07:00 AM

Click on painting for larger image in new window.

"The Money Game"

Image posted with permission from Laguna Beach artist Scott Moore.

This images is of a five foot by seven and a half foot oil painting.

Scott posted a step-by-step outline here of how he designed and painted the image (with much more detail). In the detail you can see Fannie and Freddie, Madoff, Countrywide, and much more. Enjoy.

by Calculated Risk on 7/17/2009 09:23:00 PM

This makes four today. We've discussed these two before ...

Pitcher throws to home
Failure swings.... to deep center
A double this time.
by Soylent Green is People
From the FDIC: California Bank & Trust, San Diego, California, Assumes All of the Deposits of Vineyard Bank, National Association, Rancho Cucamonga, California

Vineyard Bank, National Association, Rancho Cucamonga, 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 March 31, 2009, Vineyard Bank, N.A. had total assets of $1.9 billion and total deposits of approximately $1.6 billion.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $579 million. ... Vineyard Bank, N.A. is the 56th FDIC-insured institution to fail in the nation this year, and the seventh in California. The last FDIC-insured institution to be closed in the state was Mirae Bank, Los Angeles, on June 26, 2009.

From the FDIC: First-Citizens Bank and Trust Company, Raleigh, North Carolina, Assumes All of the Deposits of Temecula Valley Bank, Temecula, California

Temecula Valley Bank, Temecula, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.
...
As of May 31, 2009, Temecula Valley Bank had total assets of $1.5 billion and total deposits of approximately $1.3 billion.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $391 million. ... Temecula Valley Bank is the 57thth FDIC-insured institution to fail in the nation this year, and the eighth in California. The last FDIC-insured institution to be closed in the state was Vineyard Bank, National Association, Rancho Cucamonga, also today.

by Calculated Risk on 7/17/2009 08:08:00 PM

No surprise ...

From the NY Times: State Tax Revenues at Record Low, Rockefeller Institute Finds (ht Ann)

The anemic economy decimated state tax collections during the first three months of the year ... The drop in revenues was the steepest in the 46 years that quarterly data has been available.

Over all, the report found that state tax collections dropped 11.7 percent in the first three months of 2009, compared with the same period last year.
...
All the major sources of state tax revenue — sales taxes, personal income taxes and corporate income taxes — took serious blows ...

Here is the report: State Tax Decline in Early 2009 Was the Sharpest on Record

And it looks much worse in Q2:

Early figures for April and May of 2009 show an overall decline of nearly 20 percent for total taxes, a further dramatic worsening of fiscal conditions nationwide.

Note: an earlier report was on state pesonal income taxes - this is all state taxes.

by Calculated Risk on 7/17/2009 06:14:00 PM

Lets chug a lug, lug
Two down, many to follow
Quaff to banks gone bye.
by Soylent Green is People
From the FDIC:

BankFirst, Sioux Falls, South Dakota, was closed today by the South Dakota Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Alerus Financial, National Association, Grand Forks, North Dakota, to assume all of the deposits of BankFirst.
...
As of April 30, 2009, BankFirst had total assets of $275 million and total deposits of approximately $254 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $91 million. ... BankFirst is the 55th FDIC-insured institution to fail in the nation this year, and the first in South Dakota. The last FDIC-insured institution to be closed in the state was First Federal Savings Bank of South Dakota, Rapid City, on April 24, 1992.

That makes two today ...

by Calculated Risk on 7/17/2009 05:47:00 PM

Summer days heat up
Does Taxpayers cool cash quench?
Not so for Piedmont.
by Soylent Green is People
From the FDIC:

First Piedmont Bank, Winder, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First American Bank and Trust Company, Athens, Georgia, to assume all of the deposits of First Piedmont Bank.
...
As of July 6, 2009, First Piedmont Bank had total assets of $115 million and total deposits of approximately $109 million.
...
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $29 million. ... First Piedmont Bank is the 54th FDIC-insured institution to fail in the nation this year, and the tenth in Georgia. The last FDIC-insured institution to be closed in the state was Neighborhood Community Bank, Newnan, on June 26, 2009.