October 2010

Bank Failure Friday - Two for the Road

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Another Friday, another round but instead of happy hour, we have bank failures. These week's lucky winners, with their costs to the FDIC deposit insurance fund, are:

  1. Wakulla Bank, Crawfordville, Florida, $113.4 millio
  2. Shoreline Bank, Shoreline, Washington, $41.4 million

Yes, it's October 1, the end of TARP and we have over 120 deadbeat banks, not paying TARP dividends.

One hundred and twenty seven TARP recipient banks have missed dividends or have failed by the time of the August 2010 dividend. There were only 707 banks in the TARP program that received capital injections. Thus, greater than one in six missed their dividends or interest in August 2010. These banks receive $6.939 billion in taxpayer bailout monies.

Now check out this Zacks report, basically saying any bank on the problem list is a dead bank walkin'. Lovely.

In the second quarter of 2010, the number of banks on the FDIC's list of problem institutions grew to 829 from 775 in the previous quarter and 416 in the year-ago quarter. This is the highest since the savings and loan crisis in the early 1990s.

Fraudulent Foreclosures Running Amok

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The foreclosure fraud bombshell has hit the fan. Updating an earlier post, Bank of America has now halted foreclosures in 23 states:

Bank of America is joining JPMorgan Chase and GMAC is suspending foreclosure processes in 23 states that weren't reviewed properly.

A BoA exec admitted she signed up to 8,000 documents in a month and typically did not read them.

Connecticut has halted all foreclosures:

Connecticut Attorney General Richard Blumenthal on Friday ordered a moratorium on all foreclosures by all banks for 60 days--the most radical action taken by a state on issue of document irregularities.

California also expanded the moratorium on foreclosures it announced last week on Ally Financial foreclosures to include those by J.P. Morgan Chase.

Calling the companies' review of key foreclosure documents "a ruse," California Attorney General Jerry Brown (D) ordered J.P. Morgan to prove it is following the law before it continues foreclosures in the state.

Both J.P. Morgan Chase and Ally have frozen foreclosures in 23 states because some employees had signed off on foreclosure paperwork without properly reviewing the files.

Colorado and Illinois have stopped foreclosures by Ally and at least seven other states have launched probes into the issue. But Connecticut is the first to institute an industry-wide ban.

Manufacturing ISM for September 2010 - 54.4%

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The September 2010 ISM Manufacturing Survey is out and PMI came in at 54.4%. August 2010 manufacturing ISM was 56.3%. This is a -1.9% decline in the factory index. While this is the 14th month for expansion (anything above 50 is an expansion), this is a slowing on the manufacturing ISM. The below graph shows PMI is now back to December 2009 levels.

 

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