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Washington - ABC News Discloses List Of U.S. Banks Likely To Fail |
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While the Federal Deposit Insurance Corporation (FDIC) is keeping secret its official list of 90 troubled banks, ABC News has obtained other lists prepared by several research groups and financial analysts.
The lists use versions of the so-called "Texas ratio" which compare a bank's assets and reserves to its non-performing loans, based on financial data made public by the FDIC in March.
Analysts say banks with a ratio over 100 per cent would be the most likely to fail, based on what happened to Texas savings and loans during the 1980's.
"That a fair measure," said Hal Scott, a Harvard law school professor specializing in banking law.
"It doesn't mean every one of those banks is going to become insolvent, but if you have more bad loans than assets, it's not a bad way to judge what could happen," Scott told ABC News.
One list prepared by Research Associates of America, a non-profit group in Washington, D.C. funded by labor unions, reported 10 banks with a ratio over 100. (click here to see the list)
"This is information that the FDIC essentially hides in plain sight," said Jeff Fiedler, president of Research Associates of America.
At the top of the list was ANB Financial National Association of Bentonville, AR, with a 344 ratio. The bank failed earlier this year and was later taken over by a Louisiana bank.
The Colorado Federal Savings Bank of Greenwood Village, CO, was listed as having a bad loan to asset ratio of 244.82.
Repeated calls to the bank from ABC News were not returned.
The Eastern Savings Bank of Hunt Valley, MD was listed as having a Texas ratio of 222.74, meaning it had twice as many bad loans as assets and surplus.
Repeated calls seeking comment from Eastern were not returned.
The Integrity Bank of Alpharetta, GA was listed with a 191 ratio.
Calls from ABC News to Integrity Bank were not returned, but the Atlanta Constitution quoted the bank's president and chief executive, Patrick Frawley, as saying the Texas ratio is "a little misleading."
Frawley said the Texas ratio doesn't count all of the bank's reserves for losses and fails to reflect that the loans are secured with real estate collateral.
With a ratio just under 100, at 96, the $13-billion Downey Savings and Loan of Newport Beach, California is the biggest financial institution with a high ratio of bad loans.
Tom Prince, Downey's chief operating officer, said many of the bank's non-performing loans in March have since become current and that the Texas ratio "is only a statistic."
"I don't think there is any one number you can point to and say that will predict what will happen going forward," Prince said. "We feel good about our situation," he said.
The banks on the list are FDIC-insured, meaning that depositors with less than $100,000 would be covered should their banks go under.
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Read Comments (9) — Post Yours »
1
Jul 15, 2008 at 01:17 PM Anonymous Says:
I will add two to the list...
WAMU and Wachovia
If you hold your money in any of the above banks, be smart and bank somewhere else, even if you hold less then $100,000. the FDIC reserve is 50+ Billion, however the IndyMac bank is going to eat up close to 8 Billion of the reserve, now imagine if WAMU or Wachovia fails...
The FDIC may simply run out of money....
Of sure they'll pay you back, but in 20 years from now...
So again I urge everybody to be careful where they bank in the current climate
2
Jul 15, 2008 at 02:28 PM a yid Says:
Nothing is going to happen to the banks because the government can print as much money as it wants and with today's computers you dont't even have to print anything as long as the computer says there is enough money.
3
Jul 15, 2008 at 02:41 PM Wolfish Musings Says:
Nothing is going to happen to the banks because the government can print as much money as it wants and with today's computers you dont't even have to print anything as long as the computer says there is enough money.
Which proves that "a yid" knows nothing of economics.
The government can't just willy-nilly print money and put it into circulation. Nor can they just change computer entries in banks to do so.
Please learn a little bit about how money works before making suggestions.
The Wolf
4
Jul 15, 2008 at 02:47 PM Wolfish Musings Says:
My apologies to "a yid." My comments above were unnecessarily harsh.
The point still remains, however, that the government cannot do as "a yid" suggests.
The Wolf
5
Jul 15, 2008 at 02:57 PM Yankel Turech Says:
as long as the gemach is still in business vet zain gut,,,
6
Jul 15, 2008 at 06:14 PM Dovid Rosenberg Says:
a yid,
Please learn how the system works, the paper money only represents that amount of gold which lies in Ft. Knox. Printing money like you suggest will only lead to more inflation and a lower value of the dollar. So please keep this nonsense to yourself.
7
Jul 15, 2008 at 08:44 PM Greenspan Says:
The US has been off the gold standard since the Depression.
Historically, the Fed DOES print more money to cover its debts, choosing inflation and devaluation of the dollar to insolvency. This policy will eventually increase foreign investments in the US.
The current economical climate is very similar to that of the early 70s when this country was paying off the Vietnam war.
By the late 70s Japanese investors had bailed out many American concerns.
The prices of everything nearly quadrupled during the period of 1971-1985.
President Nixon price froze prices against inflation while Fed Chairman Arthur Burns printed bushels of dollars to ease the economy and get Nixon re-elected.
As they say "Deja Vu" all over again.
8
Jul 15, 2008 at 08:52 PM Greenspan Says:
More on the Gold Standard:
At the time of the Great Depression,America had a 100% gold standard for its money. This meant that all cash was backed by a government promise to redeem it in a specific amount of gold (at the time, one ounce of gold was redeemable for twenty dollars). Because the amount of money circulating in the economy is wholly dependent on the amount of gold available, the money supply is very rigid.
The gold standard effectively came to an end in 1933 when President Franklin D. Roosevelt outlawed private gold ownership (except for the purposes of jewelery). The Bretton Woods System, enacted in 1946 created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at the price of $35/ounce. The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed". The gold standard has not been used in any major economy since that time.
Almost every country, including the United States, is on a system of fiat money, which the glossary defines as "money that is intrinsically useless; is used only as a medium of exchange". We saw in the article "Why Does Money Have Value" that the value of money is set by the supply and demand for money and the supply and demand for other goods and services in the economy. The prices for those goods and services, including gold and silver, are allowed to fluctuate based on market forces.
The main benefit of a gold standard is that it insures a relatively low level of inflation.
So long as the supply of gold does not change too quickly, then the supply of money will stay relatively stable. The gold standard prevents a country from printing too much money. If the supply of money rises too fast, then people will exchange money (which has become less scarce) for gold (which has not). If this goes on too long, then the treasury will eventually run out of gold. A gold standard restricts the Federal Reserve from enacting policies which significantly alter the growth of the money supply which in turn limits the inflation rate of a country.
The stability caused by the gold standard is also the biggest drawback in having one. Exchange rates are not allowed to respond to changing circumstances in countries. A gold standard severely limits the stabilization policies the Federal Reserve can use.
Moreover, because the gold standard gives government very little discretion to use monetary policy, economies on the gold standard are less able to avoid or offset either monetary or real shocks. Real output, therefore, is more variable under the gold standard. The coefficient of variation for real output was 3.5 between 1879 and 1913, and only 1.5 between 1946 and 1990. Not coincidentally, since the government could not have discretion over monetary policy, unemployment was higher during the gold standard. It averaged 6.8 percent in the United States between 1879 and 1913 versus 5.6 percent between 1946 and 1990."
So it would appear that the major benefit to the gold standard is that it can prevent long-term inflation in a country. However, as Brad DeLong points out, "if you do not trust a central bank to keep inflation low, why should you trust it to remain on the gold standard for generations?" It does not look like the gold standard will make a return to the United States anytime in the foreseeable future.
9
Jul 15, 2008 at 09:07 PM Reba Says:
Why don't they teach economics in the yeshivas?
It is obvious that if Jews control the banks in this country, they are not on this blog.