FDIC Mulls Liquidity Safeguard as Bank Failures Climb

As four banks were shut down this week bringing this year’s total failures to 41, the Federal Deposit Insurance Corp. is considering extending a program that may reduce the credit and liquidity challenges facing smaller, community banks. FDIC Chairman Sheila Bair told a gathering of community bankers on March 19 that the regulator is considering extending the Transaction Account Guarantee (TAG) Program beyond its current deadline of June 30, 2010. TAG was enacted in 2008 as one of the measures to shore up confidence among U.S. depositors in banks of all sizes.

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Faster Pace in 2010: FDIC Says Bank Failures at 37

The Federal Deposit Insurance Corp. reported the failure of 7 more banks this week, bringing this year’s total to 37, representing a pace that will easily surpass last year’s total of 140 bank collapses. Through the end of March last year, 21 banks had failed.
Crippling loan losses propelled by a still peaking commercial real estate crisis prompted the FDIC to act against banks in Alabama, Georgia, Minnesota, Ohio and Utah.

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FDIC’s Bair Warns of ‘Backdoor Bailouts’ in Oversight Reform

The chief of the Federal Deposit Insurance Corp., the agency that protects Americans’ bank accounts, today warned of possible “backdoor bailouts” that are written into the current draft of the Senate’s financial oversight reform bill.
FDIC Chairman Sheila Bair, an outspoken critic of the government’s bailout of the biggest banks, referred to the reform’s potential loophole in a prepared speech before the annual meeting of the Independent Community Bankers of America today in Orlando.

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Bank Failures on Pace This Year to Surpass 2009 Tally

Propelled by a still unfolding commercial real estate loan crisis, bank failures this year are on pace to surpass last year’s tally of 140, with 26 institutions seized so far this year by the Federal Deposit Insurance Corp. Regulators shut or turned over to other institutions banks in Maryland, Illinois, Florida and Utah this week, pushing the number of U.S. failures to 26 for 2010. FDIC Chairwoman Sheila Bair has said she expects the number of bank failures in 2010 to exceed the 140 closures in 2009. That was the highest number in nearly two decades.

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FDIC’s Troubling Tallies: ‘Problem’ Banks at 702; Bad Loans Jump

The number of U.S.-insured banking institutions on the government’s “Problem List” jumped more than a quarter percent to 702 at the end of the fourth quarter, compared to the previous quarter, and total assets of these lenders grew 16 percent to $402.8 billion, according to the Federal Deposit Insurance Corp. The FDIC said the quality of bank loans continued to deteriorate during the fourth quarter, although the pace of deterioration slowed for a third consecutive quarter.

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FTC Rule Clarifies Confusing ‘Free Credit Reports’ Ads

Starting April 1, advertisements peddling “free credit reports” will require new disclosures to help consumers avoid confusing offers – which often require customers to spend money on credit monitoring or other products or services, the Federal Trade Commission said today. Consumers may not realize that they are entitled to a “no-strings-attached” free credit report at AnnualCreditReport.com, the FTC said.

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YouTube Rant on OneWest 'Deal' Persists Despite FDIC Rebuke

A rare rebuke from the Federal Deposit Insurance Corp. has only emboldened the makers of an accusatory YouTube video against the agency despite the vehement denial by the FDIC of any “sweetheart deal” in the sale of seized assets of IndyMac to a group of prominent investors. More YouTube videos by other real estate industry-related bloggers have surfaced reciting the same storyline in the deal between the FDIC and OneWest Bank – formerly IndyMac.

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Fed to New Directors: Ladies & Gentlemen, This is a Bank

The Federal Reserve has offered guidance in the past to new bank directors – professionals who are asked to serve on boards and often come from other business sectors – but today it has launched a website for the first time that provides bank basics and urges new overseers to be vigilant and active. The new site, http://BankDirectorsDesktop.org, is primarily for new directors of community banks and includes online training and other resources “to help directors better understand the issues and challenges.”

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Chase Chief: Faulty Oversight Much to Blame for Crisis

A “poorly organized” regulatory system had much to do with the U.S. financial meltdown, JPMorgan Chase Chief Executive Jamie Dimon told a special Congressional panel today, and he defended his bank’s policies then and now. In prepared testimony for the Financial Crisis Inquiry Commission, the 10-member panel created by the U.S. Congress to examine the causes of the financial crisis, Dimon pointed to an ill-prepared regulatory system without the necessary legal authority as a chief failing that led to the meltdown.

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Regulators Fear Another Bank Crisis When Rates Go Up

It’s no wonder banks are still tightening lending policies, despite urging from President Obama to expand credit access to small businesses. The banks keep getting warnings from regulators about “interest rate risk,” or IRR. The Federal Reserve, the Federal Deposit Insurance Corp. and other regulators want the three initials ingrained in the minds of bank executives overseeing risk exposure, particularly as interest rates are poised to move up in coming months.

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FDIC Warns Banks of Risks When Interest Rates Rise

Fueled by higher volumes of long-term mortgages, small- and medium-sized banks are becoming more vulnerable to risks when interest rates shift higher in coming months. And these institutions should begin to take precautions, said the Federal Deposit Insurance Corp. today. “For almost 20 percent of banks, longer-term assets comprise more than half of assets,” the FDIC said. “This is up from 2006, when longer-term assets made up the majority of assets at only 11 percent of banks.”

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