Friday Night FDIC Bank Seizures

Bank of Lincolnwood, Lincolnwood, IL, which makes 37 for the year.

Additionally, we have an update on Silverton Bank of Atlanta, Georgia. This large, "Bank of Banks," has been unable to find a buyer, so they are going to have to wind it down, at considerable taxpayer expense:

The U.S. Federal Deposit Insurance Corp said Friday that it would wind down Silverton Bank, a failed Atlanta bank that regulators seized last month, and sell its assets instead of trying to sell it as a whole.

Full FDIC list

Another Shoe to Drop in Real Estate

The FDIC is planning to auction off some the assets that it has accumulated, and that has the banks worried that this will force many of them into insolvency, because it will set a market price for the sh%$ that is on their books:

A Federal Deposit Insurance Corp. plan to auction more than $1 billion in assets seized from failed banks next month, including a loan to build a W Hotel in Atlanta, may trigger writedowns that weaken lenders nationwide.

Almost half of the loans were originated by Silverton Bank N.A., whose collapse last May was the biggest in Georgia history. Community banks that joined Silverton in providing $80 million for the 237-room hotel and condominium complex, as well as backing for 39 other projects, could be forced to write down their stakes to reflect sale prices.

What is going on here is that because the FDIC will be auctioning off assets, as it is required to do by law, these illiquid assets, and this will assign a fair market value to said assets.

Banks and other institutions who have maintained the illusion of solvency by using some variant of mark to myth model will therefore have to reassess the value of these assets on their books, pushing some, perhaps many, of these institutions into bankruptcy.

My Bad

On my last bank fail post, I listed the total number of bank failures this year at 28. This in error.

That number is just those banks closed by the FDIC, and I got it by totalling their Full list.

If you go there, and click on the most recent closing, it gives the current tally, which is 32 for the year.

Additionally, I neglected to mention the significance of the failure of Silverton Bank.

Silverton Bank was a large institution, providing services for other banks, about 1500 of them, not consumers.

It was a clearing house for payments, credits, and it repackaged loans among multiple banks.

As such, this may trigger further bank failures.

Posted via mobile phone....While in line for a roller coaster at Hershey Park.

Economics Update (Yesterdays)

Not much going on, it was labor day, so most of the markets and regulatory announcements didn't happen.

That being said, it looks like we may have a couple new candidates for bank failure Fridays, with the Federal Reserve imposing restrictions on two correspondent banks, Nebraska Bankers' Bank of Lincoln, NE, and Midwest Independent Bank of Jefferson City, MO.

Correspondent banks are "banks for banks", they provide clearing services, participate in large loans, etc. Silverton Bank was a correspondent bank.

We are also seeing more clouds on the horizon with insurance, with the cost of reinsurance increasing.

Reinsurance is basically insurance of the insurance companies, they sell risk to each other in order to spread the risk, and revenues, around.

As an aside, while I have been ranting about how the next crash is CRE, it might be insurance.

We are seeing more optimism among manufacturers, with the Price Waterhouse Coopers survey showing a 27% improvement, which may mean that people are going to start restocking inventories.

In energy, oil was basically flat at $68.05/bbl, while in currency, the Yen rose against both the Euro and the dollar.

Friday Night Bank Failures

28 so far this year.

America West Bank, Layton, UT

Citizens Community Bank, Ridgewood, NJ

Silverton Bank, N.A., Atlanta, GA

Full FDIC list.

Oh, we also have a German bank, Hypo Real Estate (HRE), that specialized in loans to developers being nationalized by the German government, albeit in a confusing, slow motion sort of way.

And finally, there is Accredited Home Lenders Holding Co., a San Diego, California based mortgage banker filed for Chapter 11 bankruptcy, listing debt of as much as $500 million and assets of less than $50 million.

Another Bank Closed by FDIC

Silver Falls Bank, Silverton, OR

Full list

I'm feeling proud. I caught this one, and Atrios missed it for his "eated" post.