Home › Forums › Financial Markets/Economics › I thought banks failed on Fridays …
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February 27, 2009 at 7:33 PM #357372February 28, 2009 at 3:49 AM #357017
LuckyInOC
Participant[quote=davelj]Depends. As I’ve stated here before, there are two things that kill a bank: concentration and leverage (which eventually lead to death via lack of liquidity). The biggest banks are being killed by both (but mainly leverage). The small banks that are failing thus far are entirely the result of insanely high concentrations in construction and development. I think we’re in for 300-500 FDIC-insured failures, so we’re really just getting started. But, personally, I don’t expect to have any involvement with any of these. Recall that this number represents 4%-6% of the total bank and thrift charters out there. Regarding “worry,” well, where you stand depends upon where you sit. I’m concerned about the overall economy (that’s an understatement), but I’m not particularly concerned about my personal economy, which is the only one I have much control over. I can’t speak for your personal economy, though.
[/quote]Let’s see…In a different light…
If you (davelj) buy a car and drive it twice a day. And every 4-6% of the time you drive it, it breaks down. hummm….
100 days / 2 times per day X 0.95 = 47.5 days
Every 48 days (7 weeks) you would have to call a tow truck and take it to the shop. Or 7.7 times a year. Would you not considered this car a Lemon….
How about airplanes, what if your flight crashed every 4-6%… Oh, no problem that acceptable losses. You wouldn’t risk flying…
The ‘System’ was supposed to protect the ‘people’ from this happening, like the 1st Great Depression. The Banking System failed…
You are right. It is based on the lack of ‘control’ of leverage (Fractional Reverve Banking)… The Banks do not have enough ‘Reserves’ to cover its bad ‘Loans’. It is the Federal Reserve (BANKERS) that are controlling themselves (Bankers). The FDIC was setup to insure the deposits, not the Bank’s loans. Now, We, The People, are covering the banks loans.
When an every day bank loans out 10 times its deposits on property that is only worth 50% of the Loan, it does not take a genius to figure the banks going to fail… If 20% of the loans default, the bank will not have enough reserves (10:1) from deposits.
All Institutions according to the FDIC for 12/31/08:
http://www2.fdic.gov/SDI/main4.asp1. Real Estate Owned (Foreclosed): $26,627M
2. Assets Past Due 90+ days (Real Estate): $53,911M
3. Assets Past Due 30-89 days (Real Estate): $111,707M
4. Total Real Estate Loans: $4,704,827MIt is interesting that the Inventory $$$ (#1) in is less than #2 (possible NOD) $$$ by about 50%. Does this mean there is even more foreclosures to go? And look at #3 it is double #2.
The FDIC has all this data in the past. I might plot these to see the trend.
Lucky In OC
February 28, 2009 at 3:49 AM #357319Participant[quote=davelj]Depends. As I’ve stated here before, there are two things that kill a bank: concentration and leverage (which eventually lead to death via lack of liquidity). The biggest banks are being killed by both (but mainly leverage). The small banks that are failing thus far are entirely the result of insanely high concentrations in construction and development. I think we’re in for 300-500 FDIC-insured failures, so we’re really just getting started. But, personally, I don’t expect to have any involvement with any of these. Recall that this number represents 4%-6% of the total bank and thrift charters out there. Regarding “worry,” well, where you stand depends upon where you sit. I’m concerned about the overall economy (that’s an understatement), but I’m not particularly concerned about my personal economy, which is the only one I have much control over. I can’t speak for your personal economy, though.
[/quote]Let’s see…In a different light…
If you (davelj) buy a car and drive it twice a day. And every 4-6% of the time you drive it, it breaks down. hummm….
100 days / 2 times per day X 0.95 = 47.5 days
Every 48 days (7 weeks) you would have to call a tow truck and take it to the shop. Or 7.7 times a year. Would you not considered this car a Lemon….
How about airplanes, what if your flight crashed every 4-6%… Oh, no problem that acceptable losses. You wouldn’t risk flying…
The ‘System’ was supposed to protect the ‘people’ from this happening, like the 1st Great Depression. The Banking System failed…
You are right. It is based on the lack of ‘control’ of leverage (Fractional Reverve Banking)… The Banks do not have enough ‘Reserves’ to cover its bad ‘Loans’. It is the Federal Reserve (BANKERS) that are controlling themselves (Bankers). The FDIC was setup to insure the deposits, not the Bank’s loans. Now, We, The People, are covering the banks loans.
When an every day bank loans out 10 times its deposits on property that is only worth 50% of the Loan, it does not take a genius to figure the banks going to fail… If 20% of the loans default, the bank will not have enough reserves (10:1) from deposits.
All Institutions according to the FDIC for 12/31/08:
http://www2.fdic.gov/SDI/main4.asp1. Real Estate Owned (Foreclosed): $26,627M
2. Assets Past Due 90+ days (Real Estate): $53,911M
3. Assets Past Due 30-89 days (Real Estate): $111,707M
4. Total Real Estate Loans: $4,704,827MIt is interesting that the Inventory $$$ (#1) in is less than #2 (possible NOD) $$$ by about 50%. Does this mean there is even more foreclosures to go? And look at #3 it is double #2.
The FDIC has all this data in the past. I might plot these to see the trend.
Lucky In OC
February 28, 2009 at 3:49 AM #357596Participant[quote=davelj]Depends. As I’ve stated here before, there are two things that kill a bank: concentration and leverage (which eventually lead to death via lack of liquidity). The biggest banks are being killed by both (but mainly leverage). The small banks that are failing thus far are entirely the result of insanely high concentrations in construction and development. I think we’re in for 300-500 FDIC-insured failures, so we’re really just getting started. But, personally, I don’t expect to have any involvement with any of these. Recall that this number represents 4%-6% of the total bank and thrift charters out there. Regarding “worry,” well, where you stand depends upon where you sit. I’m concerned about the overall economy (that’s an understatement), but I’m not particularly concerned about my personal economy, which is the only one I have much control over. I can’t speak for your personal economy, though.
[/quote]Let’s see…In a different light…
If you (davelj) buy a car and drive it twice a day. And every 4-6% of the time you drive it, it breaks down. hummm….
100 days / 2 times per day X 0.95 = 47.5 days
Every 48 days (7 weeks) you would have to call a tow truck and take it to the shop. Or 7.7 times a year. Would you not considered this car a Lemon….
How about airplanes, what if your flight crashed every 4-6%… Oh, no problem that acceptable losses. You wouldn’t risk flying…
The ‘System’ was supposed to protect the ‘people’ from this happening, like the 1st Great Depression. The Banking System failed…
You are right. It is based on the lack of ‘control’ of leverage (Fractional Reverve Banking)… The Banks do not have enough ‘Reserves’ to cover its bad ‘Loans’. It is the Federal Reserve (BANKERS) that are controlling themselves (Bankers). The FDIC was setup to insure the deposits, not the Bank’s loans. Now, We, The People, are covering the banks loans.
When an every day bank loans out 10 times its deposits on property that is only worth 50% of the Loan, it does not take a genius to figure the banks going to fail… If 20% of the loans default, the bank will not have enough reserves (10:1) from deposits.
All Institutions according to the FDIC for 12/31/08:
http://www2.fdic.gov/SDI/main4.asp1. Real Estate Owned (Foreclosed): $26,627M
2. Assets Past Due 90+ days (Real Estate): $53,911M
3. Assets Past Due 30-89 days (Real Estate): $111,707M
4. Total Real Estate Loans: $4,704,827MIt is interesting that the Inventory $$$ (#1) in is less than #2 (possible NOD) $$$ by about 50%. Does this mean there is even more foreclosures to go? And look at #3 it is double #2.
The FDIC has all this data in the past. I might plot these to see the trend.
Lucky In OC
February 28, 2009 at 3:49 AM #357458Participant[quote=davelj]Depends. As I’ve stated here before, there are two things that kill a bank: concentration and leverage (which eventually lead to death via lack of liquidity). The biggest banks are being killed by both (but mainly leverage). The small banks that are failing thus far are entirely the result of insanely high concentrations in construction and development. I think we’re in for 300-500 FDIC-insured failures, so we’re really just getting started. But, personally, I don’t expect to have any involvement with any of these. Recall that this number represents 4%-6% of the total bank and thrift charters out there. Regarding “worry,” well, where you stand depends upon where you sit. I’m concerned about the overall economy (that’s an understatement), but I’m not particularly concerned about my personal economy, which is the only one I have much control over. I can’t speak for your personal economy, though.
[/quote]Let’s see…In a different light…
If you (davelj) buy a car and drive it twice a day. And every 4-6% of the time you drive it, it breaks down. hummm….
100 days / 2 times per day X 0.95 = 47.5 days
Every 48 days (7 weeks) you would have to call a tow truck and take it to the shop. Or 7.7 times a year. Would you not considered this car a Lemon….
How about airplanes, what if your flight crashed every 4-6%… Oh, no problem that acceptable losses. You wouldn’t risk flying…
The ‘System’ was supposed to protect the ‘people’ from this happening, like the 1st Great Depression. The Banking System failed…
You are right. It is based on the lack of ‘control’ of leverage (Fractional Reverve Banking)… The Banks do not have enough ‘Reserves’ to cover its bad ‘Loans’. It is the Federal Reserve (BANKERS) that are controlling themselves (Bankers). The FDIC was setup to insure the deposits, not the Bank’s loans. Now, We, The People, are covering the banks loans.
When an every day bank loans out 10 times its deposits on property that is only worth 50% of the Loan, it does not take a genius to figure the banks going to fail… If 20% of the loans default, the bank will not have enough reserves (10:1) from deposits.
All Institutions according to the FDIC for 12/31/08:
http://www2.fdic.gov/SDI/main4.asp1. Real Estate Owned (Foreclosed): $26,627M
2. Assets Past Due 90+ days (Real Estate): $53,911M
3. Assets Past Due 30-89 days (Real Estate): $111,707M
4. Total Real Estate Loans: $4,704,827MIt is interesting that the Inventory $$$ (#1) in is less than #2 (possible NOD) $$$ by about 50%. Does this mean there is even more foreclosures to go? And look at #3 it is double #2.
The FDIC has all this data in the past. I might plot these to see the trend.
Lucky In OC
February 28, 2009 at 3:49 AM #357486Participant[quote=davelj]Depends. As I’ve stated here before, there are two things that kill a bank: concentration and leverage (which eventually lead to death via lack of liquidity). The biggest banks are being killed by both (but mainly leverage). The small banks that are failing thus far are entirely the result of insanely high concentrations in construction and development. I think we’re in for 300-500 FDIC-insured failures, so we’re really just getting started. But, personally, I don’t expect to have any involvement with any of these. Recall that this number represents 4%-6% of the total bank and thrift charters out there. Regarding “worry,” well, where you stand depends upon where you sit. I’m concerned about the overall economy (that’s an understatement), but I’m not particularly concerned about my personal economy, which is the only one I have much control over. I can’t speak for your personal economy, though.
[/quote]Let’s see…In a different light…
If you (davelj) buy a car and drive it twice a day. And every 4-6% of the time you drive it, it breaks down. hummm….
100 days / 2 times per day X 0.95 = 47.5 days
Every 48 days (7 weeks) you would have to call a tow truck and take it to the shop. Or 7.7 times a year. Would you not considered this car a Lemon….
How about airplanes, what if your flight crashed every 4-6%… Oh, no problem that acceptable losses. You wouldn’t risk flying…
The ‘System’ was supposed to protect the ‘people’ from this happening, like the 1st Great Depression. The Banking System failed…
You are right. It is based on the lack of ‘control’ of leverage (Fractional Reverve Banking)… The Banks do not have enough ‘Reserves’ to cover its bad ‘Loans’. It is the Federal Reserve (BANKERS) that are controlling themselves (Bankers). The FDIC was setup to insure the deposits, not the Bank’s loans. Now, We, The People, are covering the banks loans.
When an every day bank loans out 10 times its deposits on property that is only worth 50% of the Loan, it does not take a genius to figure the banks going to fail… If 20% of the loans default, the bank will not have enough reserves (10:1) from deposits.
All Institutions according to the FDIC for 12/31/08:
http://www2.fdic.gov/SDI/main4.asp1. Real Estate Owned (Foreclosed): $26,627M
2. Assets Past Due 90+ days (Real Estate): $53,911M
3. Assets Past Due 30-89 days (Real Estate): $111,707M
4. Total Real Estate Loans: $4,704,827MIt is interesting that the Inventory $$$ (#1) in is less than #2 (possible NOD) $$$ by about 50%. Does this mean there is even more foreclosures to go? And look at #3 it is double #2.
The FDIC has all this data in the past. I might plot these to see the trend.
Lucky In OC
February 28, 2009 at 8:36 AM #357553davelj
ParticipantLucky, allow me to summarize your post: more banks are going fail; they used too much leverage; there will be more foreclosures and foreclosure sales coming down the pipeline; and We the People will end up paying for a big chunk of this (actually, mainly through higher deposit fees as opposed to taxes). I agree with you. Thus, I assume that the color commentary from your post is for your own benefit.
February 28, 2009 at 8:36 AM #357691ParticipantLucky, allow me to summarize your post: more banks are going fail; they used too much leverage; there will be more foreclosures and foreclosure sales coming down the pipeline; and We the People will end up paying for a big chunk of this (actually, mainly through higher deposit fees as opposed to taxes). I agree with you. Thus, I assume that the color commentary from your post is for your own benefit.
February 28, 2009 at 8:36 AM #357582ParticipantLucky, allow me to summarize your post: more banks are going fail; they used too much leverage; there will be more foreclosures and foreclosure sales coming down the pipeline; and We the People will end up paying for a big chunk of this (actually, mainly through higher deposit fees as opposed to taxes). I agree with you. Thus, I assume that the color commentary from your post is for your own benefit.
February 28, 2009 at 8:36 AM #357414ParticipantLucky, allow me to summarize your post: more banks are going fail; they used too much leverage; there will be more foreclosures and foreclosure sales coming down the pipeline; and We the People will end up paying for a big chunk of this (actually, mainly through higher deposit fees as opposed to taxes). I agree with you. Thus, I assume that the color commentary from your post is for your own benefit.
February 28, 2009 at 8:36 AM #357112ParticipantLucky, allow me to summarize your post: more banks are going fail; they used too much leverage; there will be more foreclosures and foreclosure sales coming down the pipeline; and We the People will end up paying for a big chunk of this (actually, mainly through higher deposit fees as opposed to taxes). I agree with you. Thus, I assume that the color commentary from your post is for your own benefit.
February 28, 2009 at 7:07 PM #357460Participantdavelj,
I want to thank you for inspiring me to read and understand a ‘FFIEC 041’ from the FDIC… This is interesting (no pun intended) stuff. It will definitely make me a better Bank consumer.
I do not agree that ‘higher deposit fees’ will be paying a ‘big chunk of this’. The FDIC only covers deposits. It does not cover bad loans. The $800 BILLION bailout package for mortgage-backed securities (not deposits) last year creates a governmental deficit which will be paid back in taxes by my children. I expect even more Bailouts to be presented as the need arises. Private screw ups paid off by We, the People.
And I am sure the stating of your personal economy concern was for your own benefit as well. Your bank must have made a large profit last year. What was that bank name again?
Lucky In OC
February 28, 2009 at 7:07 PM #357762Participantdavelj,
I want to thank you for inspiring me to read and understand a ‘FFIEC 041’ from the FDIC… This is interesting (no pun intended) stuff. It will definitely make me a better Bank consumer.
I do not agree that ‘higher deposit fees’ will be paying a ‘big chunk of this’. The FDIC only covers deposits. It does not cover bad loans. The $800 BILLION bailout package for mortgage-backed securities (not deposits) last year creates a governmental deficit which will be paid back in taxes by my children. I expect even more Bailouts to be presented as the need arises. Private screw ups paid off by We, the People.
And I am sure the stating of your personal economy concern was for your own benefit as well. Your bank must have made a large profit last year. What was that bank name again?
Lucky In OC
February 28, 2009 at 7:07 PM #358040Participantdavelj,
I want to thank you for inspiring me to read and understand a ‘FFIEC 041’ from the FDIC… This is interesting (no pun intended) stuff. It will definitely make me a better Bank consumer.
I do not agree that ‘higher deposit fees’ will be paying a ‘big chunk of this’. The FDIC only covers deposits. It does not cover bad loans. The $800 BILLION bailout package for mortgage-backed securities (not deposits) last year creates a governmental deficit which will be paid back in taxes by my children. I expect even more Bailouts to be presented as the need arises. Private screw ups paid off by We, the People.
And I am sure the stating of your personal economy concern was for your own benefit as well. Your bank must have made a large profit last year. What was that bank name again?
Lucky In OC
February 28, 2009 at 7:07 PM #357903Participantdavelj,
I want to thank you for inspiring me to read and understand a ‘FFIEC 041’ from the FDIC… This is interesting (no pun intended) stuff. It will definitely make me a better Bank consumer.
I do not agree that ‘higher deposit fees’ will be paying a ‘big chunk of this’. The FDIC only covers deposits. It does not cover bad loans. The $800 BILLION bailout package for mortgage-backed securities (not deposits) last year creates a governmental deficit which will be paid back in taxes by my children. I expect even more Bailouts to be presented as the need arises. Private screw ups paid off by We, the People.
And I am sure the stating of your personal economy concern was for your own benefit as well. Your bank must have made a large profit last year. What was that bank name again?
Lucky In OC
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