Forex Market Commentaries - Bank Closures on the Horizon for 2011

The Recent History of Epic Bank Failure has been Forgotten

Sep 23 • Market Commentaries • 3315 Views • 3 Comments

During the 2008-2009 banking crisis the FDIC website experienced a surge in traffic. Plenty of observers have kept a ‘weather eye’ on the site since. It listed and continues to list failed banks and financial institutions in the USA whose depositors and investors required assistance from the Federal Deposit Insurance Corporation.

The late 2000s financial crisis led to the failure of a number of banks in the United States. Twenty-five banks failed and were taken over by the Federal Deposit Insurance Corporation (FDIC) in 2008, while 140 failed in 2009. In contrast, in the five years prior to 2008, only 11 banks had failed.

The receivership of Washington Mutual Bank by federal regulators on September 26, 2008, was the largest bank failure in U.S. history. Regulators simultaneously brokered the sale of most of WaMu’s assets to JPMorgan Chase, which planned to write down the value of Washington Mutual’s loans at least $31 billion.

2011 has seen a slight resurgence of failures when the authorities had hoped that the banking system had been, to all intents, cleansed. To date in 2011 71 USA banks have failed, whilst none have failed at the level of WaMu the fact remains that the systemic failure of the USA banking system is still apparent. Despite the bailouts, both secretive and publicised, and the regular programmes of quantitative easing and asset purchase, the symptoms are constantly treated but the disease appears to be incurable, at least by using the methods which to date have failed. In 2010 157 banks failed and there were some considerable failures that, had they failed in for example a smaller European country such as the United Kingdom, would have caused quite a stir;

  • Horizon Bank 1,300
  • Charter Bank 1,200
  • Columbia 1,100
  • Community Bank and Trust 1,210
  • First Regional Bank Los Angeles California 2,180
  • La Jolla Bank 3,600
  • Advent Bank Corp 1,600
  • Appalachian Community Bank 1,010
  • Riverside National Bank of Florida 3,420
  • Amcore Bank 3,400
  • Broadway Bank 1,200
  • Bancorp 1750
  • Eurobank 2,560
  • Frontier Bank 3,500
  • R-G Premier Bank of Puerto Rico 5,920
  • Western bank Puerto Rico 11,940
  • Midwest Bank and Trust Company 3,170
  • Tier one bank 2,800
  • Crescent Bank and Trust Co 1,000
  • ShoreBank 2,160
  • Premier Bank 1,200
  • Hillcrest Bank 1,600
Out of the 157 failed banks in 2010 twenty two banks went under citing liability figures of over $1 billion. The total asset failure from bank failures in 2010 was $95,975 billion.

 

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2011 has seen less than half the failures of 2010..so far. However, not only do we still have four months left in year the worrying fact is that failure is still deeply embedded in the banking system. It would appear that no amount of assistance can permanently fix the issue. There are several niche sites that list potential USA bank failures, alarmingly some are unerringly accurate.

The bank blog has a top forty watch list, out of the forty it had on respirator, nineteen have subsequently failed. Fortunately the biggest banks are not on the watch list..for now. Prior to the Fed’s two day meeting the belief was still prevalent that a too big to fail attitude remained within the USA authorities.

Given Ben Bernanke’s abject refusal to announce a new round of QE that view may have to be amended. An epic failure, similar to that witnessed in 2008 to Lehman cannot be ruled out. If we experience such a collapse then we’ll know we’re well and truly back in 2008 territory, what solution, temporary or otherwise, can be created is a mystery..

3 Responses to The Recent History of Epic Bank Failure has been Forgotten

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