Quote of the Day -- Another Proud Day for Missourians

"Socialism is a scare word they have hurled at every advance the people have made in the last 20 years.

Socialism is what they called public power.

Socialism is what they called Social Security.

Socialism is what they called farm price supports.

Socialism is what they called bank deposit insurance.

Socialism is what they called the growth of free and independent labor organizations.

Socialism is their name for almost anything that helps all the people."

--President Harry S Truman, said this day, October 10, 1952

Give 'em Hell, Harry.

And thanks. Thanks so very much. For all you did and said and stood and fought for.

What Americans don't know about their own economy

Bill Moyers, Matt Taibbi and Yves Smith discuss what the banks do and have done and why it's all so very criminal.
Things Americans aren't paying attention to and, it seems like, won't pay attention to, either.

"This Was Never About the Little Guy" (guest post)

There were approximtely $1.4 trillion worth of subprime loans outstanding in the United States by the end of 2007. By the first quarter of 2009, there were forclosure filings against approximately 4.4 million properties. If it was only the subprime market's fault, $1.4 trillion would have covered the entire problem, right?

Yet the Federal Reserve, the treasury, and the FDIC forked out $13 trillion to fix the housing “correction”… With all that money, the government could have bought up every residential mortgage in the country – there were about $11.9 trillion  worth at the end of December 2008 – and still have had about a trillion left over to buy homes for every American who couldn’t afford them.

--Nomi Prin, former VP at Goldman Sachs from her book It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street  (with thanks for the reference to Matt Taibbi of Rolling Stone Magazine).  Ms. Prin "frequently makes the point that the bailouts were more about paying off bets than they were about stabilizing the economy."

We've been had as chumps.

Try to have a great weekend, y'all.

Links:  http://www.rollingstone.com/politics/blogs/taibblog/mailbag-friedman-naked-swaps-and-madoff-20110228

http://www.nomiprins.com/it-takes-a-pillage/

Paying attention to the banks lately?

From Yahoo! News and the Associated Press this morning: Regulators shut banks in Florida, Washington state WASHINGTON – Regulators on Friday shut down small banks in Florida and Washington state, bringing to 127 the number of U.S. bank failures this year on a wave of loan defaults and economic distress. But here's the clincher for me: With 127 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns. By this time last year, regulators had closed 95 banks. And whereas last year most of the bank failures were due to home mortgage loans that went sour, this year it's gone commercial and so, likely, possibly much more expensive and damaging: The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers. I took this last note to be somewhat positive--the proverbial "silver lining to the cloud": The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. Anyway, for now, we're not "out of the woods" by a long shot, yet. Here's hoping things get better. And the sooner the better, too, of course. Try to have a great weekend, y'all. Link to original story: http://news.yahoo.com/s/ap/20100925/ap_on_bi_ge/us_bank_closures/print

Think the banking crisis was "last year's news"?

I wasn't sure how this was going, the banking industry crisis, but I really did hope the worst was behind us. It turns out, it's not. The FDIC closed banks last night in "Florida, Georgia, Oregon and Washington, lifting to 108 the number of U.S. banks to fail this year as the industry has struggled to cope with mounting loan defaults and recession." And here's the clincher: The number of bank failures is expected to peak this year and be slightly higher than the 140 that fell in 2009. That was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007. Well, that and this: The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $20.7 billion as of March 31. The number of banks on the FDIC's confidential "problem" list jumped to 775 in the first quarter from 702 three months earlier, even as the industry as a whole had its best quarter in two years. A majority of institutions posted profit gains in the January-March quarter. But many small and midsized banks are likely to continue to suffer distress in the coming months and years, especially from soured loans for office buildings and development projects. The FDIC expects the cost of resolving failed banks to total around $60 billion from 2010 through 2014. Additionally, with consumer confidence--and spending--both at deep lows, don't look for this to change or improve any time too soon, either. Here's hoping for the best, eh? Try to have a terrific weekend. Link to original post: http://news.yahoo.com/s/ap/20100731/ap_on_bi_ge/us_bank_closures;_ylt=AsObbyWHpmK7E_A1HA9oaoiMwfIE;_ylu=X3oDMTM1bWNjdXQ2BGFzc2V0A2FwLzIwMTAwNzMxL3VzX2JhbmtfY2xvc3VyZXMEY2NvZGUDbW9zdHBvcHVsYXIEY3BvcwM2BHBvcwM2BHNlYwN5bl90b3Bfc3RvcmllcwRzbGsDcmVndWxhdG9yc2Ns

Things W's government didn't do that led to the financial collapse

Here is a short list of what the George W. Bush Administration did and did not do, from 2000 to 2008, which led to the banking and economic collapse of the last year. (And this says nothing of what W's same administration didn't do after Hurricane Katrina hit New Orleans or other travesties):

--Failed to rein in what Chairwoman Sheila Bair of the Federal Deposit Insurance Corp. called a "shadow banking system" in which major banks ramped up their risks by making hundreds of billions of dollars in exotic, off-the-books bets.

--Decided to scale back the FBI's resources for tracking white-collar crime after Sept. 11, and assigned scant personnel at the Securities and Exchange Commission to monitor major investment banks after they were given new freedom in 2004 to take on added risks;

--Adopted rules in 2004 that restricted state regulators from policing predatory lending and other mortgage abuses, prompting some major lenders to seek federal charters to avoid tough scrutiny;

--Relyed too much on the credit ratings of Wall Street agencies, which had financial incentives to bestow high ratings on dubious mortgage-backed securities;

--Failed to monitor major banks' compensation arrangements that gave bonuses for completing mortgage securities sales, regardless of the risks of default;

--Ignored a warning to Congress by the FBI's investigation chief in 2004 that widespread subprime-related mortgage fraud would lead to a financial crisis;

--Failed to apparently be aware of and stop the illegal use of "short selling" which gets money "on the side" of a sale to a bank or lending institution. This is money that is used in the transaction but that is not reported and so is "off the books". It's illegal and it's apparently still being done today by the big banks, at minimum.

Ayn Rand, anyone?

Not me, thanks.

This, ladies and gentlemen, is why we need government.

These are all reasons why we need government regulations.

Pay attention to this Financial Crisis Inquiry Commission, folks. Read up on it. It's only just begun and the travesties are all over the map.

100 failed banks next week?

Three more banks failed Friday evening, making the total number of failed banks this year here in the US right at 98.

So, any bets on 2 more going down next Friday evening so it comes to an even 100 (or more?).

I'm thinking it's a pretty sad, unfortunate, expensive, unnecessary inevitability.

I hope not but I'd bet on it.

And I try to only bet on "sure things".

But the real question is, where is the bottom? At what point will the bank failures stop?

And no one can even begin to guess at that answer.

Link: http://www.propublica.org/ion/bailout/item/bank-failures-at-98-ytd

What I've been saying

Pimco: U.S. bank system capital insufficient

Fri Sep 12, 2008 5:38pm EDT
By Jennifer Ablan

NEW YORK (Reuters) - Mohamed El-Erian, the chief executive of top bond fund Pimco, said on Friday that the U.S. banking system doesn't have enough money to weather the current credit crunch related to massive mortgage-related losses.

Complete article here: http://www.reuters.com/article/ousiv/idUSN1244742820080912
_________________________________________________________

This is what I've been saying.

When you consider the takeover of both Fannie Mae and Freedie Mac, add in the 11 banks that have already failed this year (that one last week, remember, in Nevada, is expected to cost 500 million dollars alone), Bear Stearns, Lehman Brothers next and then the other 116 banks that are on the FDIC's list of "troubled" banks, folks, we ain't got enough money.

That's right.

The United States of America doesn't have enough money, ladies and gentlemen.

Hang on to your seats.

Oh, and the driver of the bus is asleep at the wheel.

But don't panic.

(P.S. Merrill Lynch is crumbling now, too.)

Joe Biden?

That's the best we can do?

Joe Biden?

What is that about?

What is this, the "reassuring old white guy to calm down the racists"?

Let's face it, the racists aren't going to vote for Obama, no matter what.

Who, exactly, does Joe Biden bring to the table, in terms of votes come November, that we wouldn't already have gotten?

Hillary would have brought more votes.

Same with Kathleen Sebelius of Kansas--or any intelligent, capable woman on the ticket.

But Joe Biden?

Don't get me wrong, I think he's smart and capable and, yes, God knows he's experienced and he's on the correct side of a lot of issues. His work has been good and admirable. And, sure, he knows how the system works and yeah, we hope he won't just be a "yes man" in Obama's Administration but geez, what exactly does he add to the ticket?

What, we didn't have the requisite "old white guy" on the ticket so we have to counter-balance the opposition?

I don't get it.

What part of "Change" is this?



On a completely different subject and as part of a trend I've described and discussed here in the past, the nation's 9th bank failure occurred last evening, in case you didn't see or hear of it.

A big Friday

So oil is down to $115.00/barrel today, the Dow is up, the dollar is up against the Euro and the British Pound--since they didn't raise their interest rates--and the Olympics starts today in Japan.

A big news day, to be sure.

The question for the banks--and the American people--is, will we witness and have to finance another bank failure in the next 24 hours? Will the FDIC have to march into yet another bank this evening and close it up because it's "upside down", financially.

Hopefully not, certainly.

If they don't have to, it would be nice to break the 3-week straight we've had on these things.

Hopefully it's a quiet, uneventful evening and weekend.

Enjoy, y'all.

Unfortunately correct and vindicated

Well, ladies and gentlemen, I was correct.

Do you remember last week I said there was a good possibility that we might see a bank--or two--failing each Friday night for a while?

Let me repeat: I was right.

I wish I weren't, truth be told.

According to the news this morning, a small bank in Florida failed last night. It was taken over by the FDIC, of course, and will be quickly sold. See the full story here: http://www.reuters.com/article/ousiv/idUSN0136691620080802

It was the 8th bank to fail so far this year. (Wouldn't you think Keith Olbermann--or some news junkie--would set up a weekly "bank watch"? Maybe they don't want to give the public reason to panic, since the American public doesn't want to pay attention, by and large).

The good news? It was a relatively small bank. First Priority Bank had "only" $259 million in assets and $227 million in deposits.

The bad news? Its failure will cost the federal fund that insures deposits--read: you and I, the taxpayers--an estimated $72 million.

Chalk it up to our account.

As I also said earlier here, in the 1st quarter of this year, the FDIC had 90 banks on its "watch" list. This article recounts that and states that they also won't tell which 90 banks they are. It's understandable--can you imagine the runs on those banks if they told which 90 they were?

Still, wouldn't you like to know if YOUR bank were, maybe, in trouble?

Once more, I'd like to take a moment to personally thank, with dripping sarcasm, the Republicans, for deregulating the banking industry.

Oh, well, for now, it's the weekend. Go out, work, relax, enjoy, keep cool.

Let's hope there either aren't any more banks that fail (I'm not counting on it) or, that, if they do fail, they are small and few in number.

Cross your fingers.

A weekly Friday night occurrence?

Okay, campers, last week it was the big Indymac implosion on a Friday evening.

Were you ready for this week's? No, I thought not.

This week, they weren't as big, by themselves, as Indymac, but there were 2--count 'em, 2--banks that "went down": First National Bank of Nevada and First Heritage Bank of Newport Beach (both were units of the First National Bank Holding Company, based in Scottsdale, Ariz.).

So the thing is, were you paying attention? Did you even notice this happened? They do these on Friday evenings so people won't notice and panics don't set in, of course, just like political announcements out of Washington, when they're negative. Mind you, this is big news, right? But try finding mention of it now, on your regular search engine. Pull up Yahoo! and see if it's listed there, on the first page.

It's not.

The thing is, there's more to come, apparently. Certainly we all hope not but information seems to lean otherwise. I searched yesterday on the internet and, from what I read, the FDIC was watching 90 banking institutions, that may be on less than solid ground.

So for the foreseeable future, you might want to watch for those Friday night announcements. It's like I keep saying, pay attention.

Oh, and if one or more starts happening mid-week, and they can't contain the collapse of this or that financial institution(s)? It means things have really gone to heck--either for that one institution or, God forbid, for the banking sector in general, and in a much larger scope.

Here's hoping there aren't too many more weeks of this stuff.