FDIC geared up for busy year of bank failures - expects failure rate to remain high in 2010



* FDIC says expects failure rate to remain high in 2010

* Says equipped with staff, tools to handle failures

* Defends Oct. decision to sell 9 units of FBOP Corp

By Karey Wutkowski

WASHINGTON, Jan 20 (Reuters) - The U.S. agency charged with dismantling or selling off failed banks said it is equipped to deal with what it sees as a busy 2010, according to remarks to be delivered before Congress on Thursday.

The Federal Deposit Insurance Corp expects that bank failures will remain elevated this year, said Mitchell Glassman, director of the FDIC's division of resolutions and receiverships.

Regulators seized 140 banks in 2009, the highest annual level since 1992 in the wake of the savings and loan crisis. Many of the institutions collapsed due to deteriorating loans from the credit boom.

"While the economy is showing signs of improvement, recovery in the banking industry tends to lag behind other sectors. We expect to see the level of failures continue to be high during 2010," Glassman said in testimony posted to the website of the House of Representatives subcommittee on financial institutions.

The FDIC has said it expects the total bill for bank failures to reach $100 billion for the period of 2009 through 2013.

FDIC Chairman Sheila Bair told a commercial real estate conference on Wednesday that troubles in the commercial sector will increasingly be a driver of bank failures this year.

The woes in the banking industry have migrated from home mortgages to commercial real estate (CRE), especially for community banks that tend to have higher concentrations of commercial loans.

Bair said that failed banks with high concentrations of CRE may be difficult to sell as a whole bank, meaning the FDIC may resolve more institutions through securitizations.

Glassman said in his testimony that the FDIC has beefed up the division in charge of bank failures, almost tripling the staff to 1,161 in 2009. That number is expected to grow to 2,310 this year.

He also noted that the FDIC relies on a large number of private contractors and outside law firms to quickly and efficiently resolve failed banks.

In the most recent sign of the FDIC girding for continued distress across the nation, the agency announced this week plans to open up a satellite office in Chicago, to complement the work of other satellite offices in Irvine, California, and Jacksonville, Florida.

FBOP sale

Glassman further used his testimony to explain why the FDIC chose to sell the nine subsidiary banks of FBOP Corp in October, saying it was the least-costly solution.

He said the banks' chartering authorities notified the FDIC of plans to close seven of the subsidiary banks, but the FDIC decided to also sell the two other subsidiaries because of their clear weaknesses.

It used its cross-guarantee authority to sell the other two units. That authority says the FDIC can assess banks that have not failed for the anticipated losses to the Deposit Insurance Fund caused by the failure of affiliated banks. If the losses are too great, it can result in the affiliated banks also being closed.

U.S. Bancorp (USB.N) acquired the nine banks that had been held by FBOP Corp, picking up $19.4 billion in assets and $15.4 billion of deposits.

Glassman said FBOP's banking units were "in deteriorating financial condition and had poor future prospects." It had unsuccessfully tried to sell off subsidiary banks and raise new capital, he said.

Also in prepared testimony, Michael Kelly, the chief executive of FBOP, said his company's story should challenge policymakers to understand the challenges of community banks.

While not accusing regulators of improperly seizing the institution, Kelly said FBOP was not given a chance to raise private equity that would have served as a match for funds from Treasury's Troubled Asset Relief Program.

Two previous FBOP proposals for TARP funds were deferred by regulators.


The testimony is posted at: here: http://www.house.gov/apps/list/hearing/financialsvcs_dem/FIhr_01212...


(Reporting by Karey Wutkowski; Editing by Tim Dobbyn)

FDIC says expects failure rate to remain high in 2010 - 20 January 2010 (Reuters) http://tinyurl.com/ydqwgy5

Views: 62

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted blog posts
13 hours ago
Doc Vega commented on Doc Vega's blog post A Few More Rats in Your Skull Concerning Charlie and the Rampaging Left
"cheeki kea, Yes that was released on to book sites 19 hours before the tragic event and also there…"
16 hours ago
Burbia commented on Sandy's video
22 hours ago
Sandy posted a video

Charlie Kirk Was Terrified Of Israel

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.
yesterday
Sandy posted a photo
yesterday
cheeki kea commented on Doc Vega's blog post A Few More Rats in Your Skull Concerning Charlie and the Rampaging Left
"The internet is fractioned that's for sure but it never sleeps and the big question of the day…"
yesterday
Burbia commented on Doc Vega's blog post A Few More Rats in Your Skull Concerning Charlie and the Rampaging Left
"It seems America has many meanings to many people. The internet has fractioned everybody. I had…"
yesterday
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"Cheeki kea I'm glad that the giant Moa downsized to this turkey looking land walker.!"
yesterday
Burbia commented on Burbia's blog post Charlie Kirk Assaination
"I don't know what difference if any that he was also a member of Council for National Policy.…"
yesterday
Doc Vega commented on Burbia's blog post Charlie Kirk Assaination
"I remember when they found out that the united Council of Churches worldwide had been funding…"
yesterday
Doc Vega posted a blog post

A Few More Rats in Your Skull Concerning Charlie and the Rampaging Left

 Political violence and death has been perpetrated for a long time now in America. The Democrats…See More
yesterday
Burbia posted a blog post

Charlie Kirk Assaination

September 10th 2025 in Utah Turning Point USA CEO has been assassinated. Coincidentally,  answering…See More
Thursday
Doc Vega posted a blog post

Bow to Your New Masters

 Dr. Jerome Corsi reports that the discovery of a new wireless system that can corrupt any…See More
Tuesday
cheeki kea commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"Wow I never knew penguins got down sized also over time. I knew of the Moa which is really now a…"
Tuesday
Sandy posted a video

Civalyze meme

meme ad for a fake drug that would do away with black fatiguecivilyze you're not racist your just exhausted
Monday
Burbia posted a blog post

Is the Timing of Alex Jones and Charlie Sheen Connected?

Alex Jones is sperging out.Charlie Sheen is coming out of the closet.Is this why Alex Jones is…See More
Sep 6
Doc Vega posted a blog post

Buying the Last haunted House on the Left (A partial autobiography)

Note to the reader, there are events here that are true and some that are fictional.Chapter IIt was…See More
Sep 5
Doc Vega posted a blog post

In Memory of Those Who Served

 Bullets flew and ricochetedI was on that hill todayMy Company commander got blown awayI was on…See More
Sep 4
Doc Vega posted blog posts
Sep 2
Doc Vega commented on Doc Vega's blog post Plausible Explanation Behind Recent Cryptid Sightings in the Wild!
"cheeki kea I was wrong Emperor Penguins are big and powerful but still alive but this,  A size…"
Sep 2

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted