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Good NEWS..FDIC is preparing!

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Feb 26, 2008 2:43 pm
February 26, 2008

WASHINGTON -- The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation's housing and credit markets continue to worsen.

The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.

• Out of Retirement: The FDIC is recruiting 25 of its retirees experienced in handling insolvent financial institutions.
• The Reasoning: The agency is preparing for an increase in failed financial institutions as the housing and credit markets worsen.
• What's Next: The FDIC will give an update today on the number of "problem" institutions that regulators are watching most closely.FDIC spokesman Andrew Gray said the agency was looking to bulk up "for preparedness purposes." The division now has 223 employees, mostly based in Dallas.

The agency, which insures accounts at more than 8,000 financial institutions, is also seeking to hire an outside firm that would help manage mortgages and other assets at insolvent banks, according to a newspaper advertisement.

Behind the Scenes

In public, policy makers are debating what role the government should play in trying to stabilize the housing market and minimize foreclosures. Meanwhile, regulators have worked discreetly behind the scenes to closely monitor the growing number of troubled banks and thrifts considered at risk.

"Regulators are bracing for well over 100 bank failures in the next 12 to 24 months, with concentrations in Rust Belt states like Michigan and Ohio, and the states that are suffering severe housing-market problems like California, Florida, and Georgia," said Jaret Seiberg, Washington policy analyst for financial-services firm Stanford Group.

In job postings on its Web site, the FDIC said it is looking for people with "skill in performing duties associated with a financial-institution closing, such as receivership management, resolutions and/or asset disposition; knowledge of the resolutions process as it relates to complex financial institutions." Such positions would require "very frequent overnight travel," the posting said, and would pay up to $180,770.

"The notion of bringing back some people who have been through it before is very smart," said William Isaac, who was FDIC chairman from 1981 until 1985. All told, the FDIC has roughly 4,600 employees, far fewer than the about 15,000 it had as recently as 1992.

On Sunday, the FDIC ran a newspaper ad seeking companies that could service commercial loans, mortgages and student loans in the event of a bank failure. It didn't say how much a company could earn in this area.

The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts. The FDIC is expected to update its data on "problem" institutions today.

Before the housing market soured, the banking industry was enjoying one of its most profitable stretches in U.S. history. There wasn't a single bank failure from July 2005 through January 2007, an unprecedented span.

There have only been four bank failures in the past 12 months, a rate the FDIC has easily been able to handle.

Weakening Performance

In many parts of the country, the housing-market decline has hamstrung banks, and regulators have reported weakening performance of commercial real estate, small business and credit-card loans. Exacerbating the situation is a cash-flow crunch, which makes it harder for banks to obtain funding to originate new loans.

FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan and Office of Thrift Supervision Director John Reich have warned of a pickup in bank failures. Last week, Mr. Reich reported that the thrift industry lost a record $5.2 billion in the fourth quarter.

The FDIC was created by Congress in the 1930s after a series of bank runs during the Great Depression. At the end of 2007, it had $52.4 billion in its fund that backstops the nation's insured deposits.
Feb 26, 2008 11:23 pm

My brother in law is with FDIC…

  he said it is going to get ugly.....real ugly.
Feb 27, 2008 12:33 am

[quote=Jonesness]My brother in law is with FDIC…

  he said it is going to get ugly.....real ugly.[/quote]

That pretty much seals it for me ... can't get much more reliable than brother-in-law gossip.
Feb 27, 2008 2:51 am

Watch out…Black Helicopters

Feb 27, 2008 2:57 am

actually if you see black crown vics at your banking headquarters…pull your money out in the morning

Feb 27, 2008 3:00 am


not gossip...actions speak louder than words.
Feb 27, 2008 5:30 pm

"The FDIC rated 65 banks and thrifts as "problem" institutions at the end of the third quarter of 2007, up from 47 institutions a year earlier. Both figures are low by historical standards. At the end of 1993, there were 572 "problem" banks and thrifts."

Yessir...this sounds like a bona-fide crisis...

Feb 27, 2008 5:52 pm

Ha ha…during the third quarter we here holding hands and skipping thru the park like goldilocks.  Damn…how things have changed

  "Regulators are bracing for well over 100 bank failures in the next 12 to 24 months"   these aren't "problem banks"...these are forcasted to close banks indy jones, well over a 100...they say well over meaning way over 100.  why the heck do we deny the crisis?? Fear? Ignorance? Stupidity?....what?
Feb 27, 2008 6:53 pm

Damn…you have me pegged…senior members in an anonymous forum…I didnt realize I had to yield to them.  Boy…theyve made alot of posts…they must be more experienced than I.   I need to take it like a man when they dish it out. Sorry…I am fully capable of civil discussion…I just hate ignorance…and there is some going on on this forum. 

Foreclosures are part of the current  financial crisis ...for some reason, some are in denial..why? And why are people getting mad about the FDIC bank closures...SHi+ happens.  Reality...not fiction. I don't know about doom and gloom, but we are in a bear market, deal with it instead of burying your head in the sand.  Who the hell is freaking out, not me, I just came to this forum after doing an internet search on leaving E Jones.  Inquisitive minds want to know...I read some threads... wow....painful. No offense, but staying the course is for..........
Feb 27, 2008 9:50 pm

Point taken…I’m glad you like to look at all points of view, IMO everyone needs to.

To the namecalling point..if someone resorts to anger and a confrontational response (unsoliciated)..then it is just my nature..just like in real life..I dont take crap.   I have always called it like I see it.. Might be an issue I need to back off on...but I've done well so far.   Thanks for your 2 pennies, i have gathered some good info on this forum so far as far as my leaving my company agenda, thank you to everyone that has been helpful and informative.   As far as economic knowledge of this advisors thread talked about a being a salesman...gotta push the product, and cross your fingers that it doesnt blow up.
Feb 29, 2008 8:30 pm

Back to the thread topic…Ive been watching=sbp and cors…any week now.

Mar 4, 2008 5:47 pm

I continue to be puzzled about who to believe on the “banking crisis”.  While nobody’s saving we’re problem-free in the banking sector, today’s noon commentary on CNBC paraphrased (and can’t recall who was saying it)…8,223 banks…76 on the “problem” list with total assets of less than what C will write off this quarter.

  Somebody is waaaaaaaaaaaay off with their assessment and I'll watch with interest as this thing plays out to see who was closer to the truth.
Mar 4, 2008 7:15 pm

FDIC is always way off on their public “assessment”.  C, BAC and WM are on their internal problem list…I don’t know why it is so puzzling.  CNBC is full of BS…period.

Mar 4, 2008 7:37 pm

Having referred to it as financial porm in the past, I’d be inclined to buy into your CNBC argument, except that this guy was the exception…most or their guests have been spouting the same doom and gloom that you are.

  So are they still full of BS or is it only when they disagree with you?
Mar 4, 2008 7:43 pm

When they disagree with me!!  all kidding aside… know what I am saying..they are a bit too optimistic about alot of the current issues...CNBS..thay can't help it..that is how they are programmed to report news.  Bloomberg for me. (most of the time)
Mar 4, 2008 8:01 pm

Well, it’s apparent to me that opinion is all over the map on this question, so I’ll gladly let time settle the argument.  One thing I can say with some conviction is that CNBC/CNBS is not playing the roll of cheerleader here…not by a long stretch.

Mar 4, 2008 10:10 pm

Well…up till 2 weeks ago…they were definitely cheerleaders…that Kneal guy is still a “no recession” cheerleader…although he is slowly looking more and more beat down lately!

Mar 6, 2008 2:37 pm

They are about 2 quarters behind on a regular basis…as are most financial advisors.   watch this cnn video.
Mar 6, 2008 5:40 pm

When pessimism runs rampant like it is right now, that's a fairly good indicator that we are at least close to the bottom of the market.  Feel free to promote that point of view and I'll let my stocks climb your "wall of worry"...

Mar 7, 2008 1:38 am

Indy…top of the second inning…IMHO