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The FDIC is broke, out of money, in debt.

by James Denison / February 26, 2010 4:06 PM PST

It may need a bailout by end of this year. Another question is why the FDIC is shutting down a bank (Ranier Pacific) with assets over 750 million and deposits of less than 500 million? Was this particular shutdown a ripoff of the holding company and it's shareholders? Remember, the FDIC depends on banks to support it, so technically if enough banks fail, especially this year, it will fail just like FSLIC did years ago.

LINK

The pace of bank seizures this year is likely to accelerate in coming months, FDIC officials said this week.

As the economy has weakened, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions of dollars out of the federal deposit insurance fund. It fell into the red last year, hitting a $20.9 billion deficit as of Dec. 31.

Carson River Community bank's failure will cost the FDIC's insurance fund about $7.9 million. Rainier Pacific's failure will cost the insurance fund about $95.2 million.

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.

The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to replenish the insurance fund.

Rainier Pacific Bank had $717.8 million in assets and $446.2 million in deposits as of Dec. 31. (whole article at link, above are excerpts)

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more info explaining Ranier Pacific
by James Denison / February 26, 2010 4:31 PM PST

Other liabilities than just the deposits factor into this. Based on below figures, it would seem their total assets by this year would have been less than the outstanding liabilities plus insured deposits. Also those assets may be distressed since FDIC had to offer a loss-share to the receiving bank.

The real story though is the draining of the FDIC, it being in the red financially itself now, and more bank closures expected this year.

http://www.faqs.org/banks/Rainier-Pacific-Bank-38129-Tacoma-Washington.html#top

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Deregulation
by Willy / February 26, 2010 9:37 PM PST

IMHO, all these recent bank or saving institution failures are a direct result of "deregulation". If they were doing what always made money and safely I might add, they would still be here. But no, they want to expand and that's when deregulation comes in. Once the caps were off, they went on a tear, good at 1st but disregarding common prudence, sooner or later they go bust. It happened in the 30's, 80's and now 00's. It makes no sense to not rethink this, just go back to the way it way it was. All those safeguards, lost or worse ignored or avoided set this all up for the big fall. As you and I know it, the taxpayers or poor Joe has to pay for it. More and more people are realizing that Washington is not working for the public but big business, etc.. Any thinking if Washington provides for bis business that they in turn will provide for the public is flat out wrong and when wrong, in a big way. the longer this goes on the harder it will to take corrective action which is always the hard pill to sallow. -----Willy Happy

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Yes, and no.
by James Denison / February 27, 2010 12:44 AM PST
In reply to: Deregulation

The problem with that is the banks being closed down are smaller ones that never got involved with the riskier type of business the big banks did when they were allowed to be involved in the stock market. The big banks which engaged in the riskiest behavior were bailed out. The smaller banks which are failing mainly due to a fall in real estate values are doing the same as they've done for years. Some of the small banks are failing because of the TYPE of real estate loans they gave, such as for big development projects, but even those which kept their business more diversified through use of good number of smaller loans rather than a few loans (cheaper to keep book on) involved in larger development projects, have failed.

I see the biggest problem since this whole mess started being the failed policy of "too big to fail" which may end up costing us more in the long run. My support initially of bailout was in belief it would be to expand funds for deposits, which was done by expanding how much deposit could be insured (raised from 100K to $250K). Then things started going stupid. I've yet to figure what basis was used to let Lehman Brothers and Bear Stearns fail, while rescuing other investment banks. What basis decided Citi Bank should be saved (since it had the worst financial record) but Washington Mutual should be raided by the govt. Were they really that pissed off by the TV commercials???

History is going to look back at who was saved and who was trashed and also wonder, or expose, the reasons behind some of the currently incomprehensible moves the govt made.

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regulations
by Willy / February 27, 2010 4:00 AM PST
In reply to: Yes, and no.

failed policy of "too big to fail"
\\\\\\\\\\\\\\\

That happened because of deregulation, as when banks could do "interstate banking". Once that hurdle was tossed, then banking became "regional, then national", they grew. If the banks remained as they were you wouldn't have a bank in Georgia supporting some business venture in Minnesota, etc.. Further, there are ventures besides real estate that got them into trouble, I'm sure. They were flush with cash and small banks didn't want to be left out. Sure some banks got caught in a deal that went sour, but all too often they ventured outside of their norms. Sure some banks got rich and did well and played actually the right way, but some didn't and many that were short, because they played too many deals or too big. Of course banks that did stocks as well once only brokers did, well you know the outcome. That was a regulation tossed too. -----Willy Happy

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that's pretty accurate
by James Denison / February 27, 2010 8:51 AM PST
In reply to: regulations

They all started chasing the same "hot" markets and then those markets went "cold". Everybody started hurting the same according to the percentage they'd chased the hottest areas.

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out of money, in debt.
by JP Bill / February 26, 2010 11:56 PM PST

Just like the majority of citizens?

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I've not looked at the figures for citizens
by James Denison / February 27, 2010 12:59 AM PST
In reply to: out of money, in debt.

I would think that the majority are in debt. Thankfully I'm not in that position. My house and all vehicles are all paid off and I have no CC debt except month to month. Those in hock up to their ears might consider that "rich" but it came only from denying myself things they weren't willing to do without and purchased with debt. What things? Bigger TV's, bigger house (mine is 2000sqft), that speed or fishing boat, the more expensive vehicle, better vacations than every other year for a long weekend or two, and things I probably haven't considered.

My aim in life was always, "make your ground sure" as my grandad would say. Get your place, pay it off soon as possible, then you can start to add some comforts to life. We paid ours off in 15 years. Most take out a 25-30 year loan. It wasn't easy, it involved sacrifice, but life right now is fairly decent as I can see others starting to fail in this current economy. All I need to cover at this point is phone, water, electric, property taxes, and travel expense with an eye toward necessary upkeep on property.

Too many people have been living a lie, a lifestyle that was beyond their income. They shouldn't have been living in a McMansion barn of a home when all they really could have afforded using reasonable mortgage methods would have been a small rancher.

I don't feel like picking up the tab for their foolishness. Do you?

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You're not like this guy
by JP Bill / February 27, 2010 5:16 AM PST
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(NT) they wonder Why they're shunned?
by JP Bill / February 27, 2010 5:33 AM PST
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a little discrimination
by James Denison / February 27, 2010 9:02 AM PST

might have been advisable in that case, as in finding people who would be more willing and able to fit into the community. City "slickers" often have hard times fitting into rural communities, especially one as rural as that.

I've wondered in recent years, where lands are no longer used for farms, turned back to counties, states, why aren't they instead converted back to natural settings, perhaps with an eye toward creating a north-south migration corridor for the buffalo again.

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They did try...
by Willy / February 27, 2010 9:42 AM PST

That well be true being shunned but he wasn't trying to run a farm either if you think ND. Nope, he tried a small business(s) but they failed. Why? well maybe because there were too few customers to begin with. On top of that, yes you had to know people and the whole 9 yds. but he also started a business where there was already one present or similar. Too few customers and no traffic means hard business. being from Florida and then ND, well if you can't take the cold as usual expect to pack quickly. Happy Regardless of gold chains and etc., he and family were different but the school system certainly missed the kids. Plus, no one else accepted the move but this one family, so they gave up alot to start anew even with perks. But, what gets me, they moved back to Miami, Florida and the reason they left was because of crime, etc.. But also to return to be closer to other family members too. -----Willy Happy

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