You are browsing the archives of 2009 September.

FDIC To Increase DIF  By $45 Billion
The FDIC announced today a proposal to increase the deposit insurance fund (DIF) by requiring financial institutions to prepay three years of assessments.   The collection of prepaid assessments will allow the FDIC to cover the cost of future banking failures without tapping their credit line with the US Treasury [...]

The FDIC Board of Directors will meet today to discuss the Deposit Insurance Fund Restoration Plan, assessments and funding.  As the number of banking failures continues to increase, it has become obvious that the current amount of reserves ($10.4 billion) in the FDIC deposit insurance fund (DIF) are totally inadequate to cover expected FDIC losses [...]

The most expensive banking failure in U.S. history was the closure of IndyMac Bank in July 2008.   The original estimated loss to the FDIC of $8.9 billion  has recently been increased to $10.7 billion or 33% of IndyMac’s assets at the time of closure.  The story of how IndyMac Bank was allowed by regulators [...]

FDIC Debt Guarantees Decline 4% In August
The FDIC Temporary Loan Guarantee Program (TLGP) was instituted late last year.  The program’s stated purpose and goals, according to the FDIC, is as follows:
The FDIC has created this program to strengthen confidence and encourage liquidity in the banking system by guaranteeing newly issued senior unsecured debt of banks, [...]

Will Financial Regulatory Reform Succeed?
In an assessment of the proposed changes to the financial regulatory system, one expert expects the changes to be more evolutionary than revolutionary.   Robert Pozen, chairman of MFS Investment Management and senior lecturer at Harvard Business School, summarized his viewpoints in a Barron’s article.
Banking Agencies

Instead, Congress is likely to merge the [...]

Banking Failures - 95 And Counting
2009 has now seen a total of 70 more failed banks than occurred for all of 2008.  The latest banking closure brings total banking failures for 2009 to 95.  The latest failed bank on September 25, 2009 had total assets of $2 billion and total losses to the FDIC Deposit [...]

FDIC Loss Sharing Examined

Loss sharing is a common feature of purchase and assumptions agreements used by the FDIC to move failed bank assets into the private sector.  Under a loss share agreement, the FDIC agrees to absorb a certain portion of losses on a failed bank’s assets that are purchased by an acquiring bank.  From [...]

Foreclosure Rescue & Loan Mod Scams Prey On Desperate Homeowners
The FDIC has issued a warning to homeowners who have fallen behind on their mortgage payments and may be facing foreclosure to avoid foreclosure rescue and loan mod scams.   Unscrupulous individuals and companies are promising  desperate homeowner that they can stop foreclosures or get mortgage payments [...]

Too Big To Fail Doctrine Needs To Be Abandoned
FDIC Chairman Sheila Bair, in a speech at Georgetown University, outlined her plan for a better regulated financial system based on market discipline and ending the “too big to fail” concept.  Chairman Bair’s viewpoint is that the doctrine of “too big to fail” rewards mismanagement and excessive [...]

Banking Failures - 94 And Counting
2009 has now seen a total of 69 more failed banks than occurred for all of 2008.  The latest banking closures by the FDIC bring total banking failures for 2009 to 94.  The latest two failed banks on September 18, 2009 had total assets of $3.2 billion and total losses [...]