The FDIC seized another seven banks today at a cost approaching two billion. Two of the banks could not be sold at any price and they appear to have been trying to unload them for some time. So the government will just mail checks to those depositors that are covered by insurance. Everybody else will just eat their losses.
Banks that are healthy enough themselves to absorb other banks are becoming increasingly scarce. An indication of what the padlock men expect for next year is that they have increased their staffing budget by 55% and doubled the budget for the holding of banks in receivership. That would be for the temporary running of banks they board up and the mothballing of other assets that they can’t unload because of their excessive toxicity.
They like to say at a 140 closings we are no where near the numbers of the banks closed during Reagan’s crash of the S&Ls that peaked at 650 in one year during Pappy Bush’s years but many of these banks are large chains so the numbers don’t directly compare. The FDIC and/or the Treasury Dept. as well as the Federal Reserve have already been assuming the risk for trillions of toxic assets that far outstrip the losses from the good old days of that meltdown.
Next year we will see the first real wave of the bank tsunami, so far people are just standing on the beach wondering where the water went. We can expect the illusion of recovery from the Obama bubble but what we need is some real leadership because those waves are just going to keep coming. www.prairie2.com