The FDIC estimated today that the FDIC Deposit Insurance Fund (DIF), which protects depositors in the case of banking failures, will not return to the statutory minimum level required until the first quarter of 2017.   The largest number of banking failures in twenty years has depleted the DIF, even after the FDIC collected $46 billion in prepaid DIF assessments at the end of [...]

Housing Bubble and Crash Explained – The Common Sense Explanation Thousands of articles have been written explaining how the bubble in housing developed and why it subsequently came crashing down, causing the collapse of some of the biggest financial institutions in the United States.  Perhaps most of us are simply worn down or confused by the plethora of articles and resigned [...]

Regulators Tell Bankers That Pay Should Be “Risk Adjusted” June 21, 2010 – The nation’s top banking regulators today moved to curb flawed incentive compensation plans that encouraged banking employees to take imprudent risks.  Citing pay practices that contributed to the recent financial crisis, regulators issued financial institutions final guidance  to [...]

June 18, 2010 – Nevada saw its third banking failure of 2010 with the closing of Nevada Security Bank, Reno, Nevada.   Failed Nevada Security was acquired by Umpqua Bank of Roseburg, Oregon, in a purchase and assumption transaction with the FDIC.   Since the FDIC was able to find a buyer for Nevada Security Bank, all five branches of the failed bank will open as usual [...]

June 17, 2010 – Lawmakers have agreed to make permanent the temporary increase on depositor insurance by the FDIC.   To avoid depositor panic during the height of the financial crisis in the fall of 2008, the government temporarily increased deposit insurance limit from $100,000 to $250,000.   The increased deposit insurance was due to expire on December 31, 2013 The US [...]

June 11, 2010 – The Washington Department of Financial Institutions closed today Washington First International Bank, Seattle, Washington.  Washington First, a half billion dollar asset bank, became the nation’s 82 banking failure and the seventh in Washington state.  Failed Washington First was acquired by East West Bank of Pasadena, CA in a purchase and assumption [...]

June 7, 2010 – In a speech given today, FDIC Chairman Sheila Bair questioned the wisdom of government policies that over-subsidize home ownership while devoting insufficient attention to the need for affordable rental housing.  The Chairman noted that expansive public and private efforts to push homeownership to a record level of 69% ultimately proved to be unsustainable, [...]

Shareholders Facing 100% Loss On Investment June 4, 2010 – Nebraska’s first bank closing of 2010 was the giant TierOne Bank of Lincoln, Nebraska.  TierOne was one of the largest publicly held thrifts in the Midwest and had 69 branches located in Nebraska, Iowa and Kansas.   According to the bank’s website, TierOne was originally organized in 1907 as Fidelity [...]

June 4, 2010 – Arcola Homestead Savings Bank, Arcola, IL became the 80th banking failure of 2010 after the bank was closed by the Illinois Department of Financial Professional Regulation.  Illinois has now had 12 banking failures this year, trailing only Florida with 13 banking failures. The FDIC, appointed as receiver for the failed bank, could find no willing buyer for [...]

Mississippi Sees First Banking Failure In 2010 The Office of the Comptroller of the Currency closed First National Bank, Rosedale, MS, and appointed the FDIC as receiver.  The Jefferson Bank, Fayette, MS took over First National and agreed to assume all deposits and purchase essentially all of the assets of the failed bank. First National, established in 1907, had only one branch [...]