their business decisions allow them to swim or sink that our reps in DC would give them our tax dollars is a tragedy
On Aug 10, 12:45 am, "\"Lone Wolf\"" <[email protected]> wrote: > 72 failures so far this year > Three more US banks collapse > By Patrick O’Connor > 10 August 2009 > > US regulators closed another three banks last Friday: First State Bank > and Community National Bank, based in Florida, and Oregon’s Community > First Bank. The Federal Deposit Insurance Corporation (FDIC) is > expected to pay out $185 million to cover closure costs and insured > deposits for the three institutions. A total of 72 US banks have > collapsed so far this year, up from 25 in all of 2008 and three in > 2007. > > Recent bank failures have highlighted the financial system’s > unresolved toxic asset crisis. An estimated $2 trillion in bad debt > remains on the banks’ books, with banks refusing to write down or sell > assets whose real worth is only a small fraction of their nominal > value. Compounding many banks’ problems is the ongoing contraction in > economic activity, which, in turn, is rebounding on the financial > sector. A collapse in the commercial real estate market is now widely > feared. > > At the end of the first quarter this year, the FDIC listed 305 unnamed > institutions with a combined asset value of $220 billion as “problem > banks” at risk of collapse. > > Smaller regional banks have been among the first to go under. Of the > latest collapses, Community National Bank had assets of $97 million > and deposits of $93 million, Community First Bank had $209 million in > assets and $182 million in deposits, and First State had $463 million > in assets and $387 million in deposits. These figures pale in > comparison to the trillion dollar holdings of the largest US banks. > The elimination of many smaller institutions is in line with the > strategy of the biggest banks, aided by the Obama administration, to > utilize the economic crisis to engineer a sweeping reorganization of > the banking and financial system, concentrating greater market share > and economic power in the hands of a few giant firms. The Troubled > Asset Relief Program (TARP) and other bailout measures overseen by the > Obama administration and the Federal Reserve have enabled firms such > as Goldman Sachs and JP Morgan Chase to reap record or near-record > profits—and reward their leading personnel with bonuses as big or > bigger than the multi-million-dollar payouts that preceded the crash > of 2008. This is in part due to the elimination of major rivals such > as Bear Sterns, Merrill Lynch, Washington Mutual and Lehman Brothers. > > In the banking sector, the FDIC is playing the central role in the > consolidation drive that aims at creating a network of mega-banks. > > This year’s string of bank collapses has cost the federal insurance > fund more than $15 billion in insured deposits and other expenses. As > a result, the fund is 75 percent under its statutory minimum balance. > > To help make up the shortfall, a fee has been levied on member banks, > further eating into the limited revenues of many smaller institutions. > The Baltimore Business Journal recently noted the case of Maryland’s > Sandy Spring Bank, which on July 23 reported second quarter losses of > $1.5 million after paying an FDIC surcharge of $1.7 million. > Additional levies are expected later in the year. > > At the same time, the FDIC is selling failed banks to larger > institutions at bargain prices—and in many cases with a no-loss > guarantee on bad debts. “Cleaning up after bank failures is one chore > you won’t hear bankers complaining about,” Fortune magazine noted in > an article last month, which highlighted the FDIC’s so-called loss- > sharing agreements. “It’s this provision—capping the acquirer’s losses > at the expense of the fund—that is most alluring.” > > Throughout the economic crisis, the Obama administration’s central > imperative has been to protect the interests of the financial elite by > placing virtually unlimited public funds at its disposal. > > The Federal Reserve has enacted a series of measures—without either > public discussion or congressional authorization—to funnel public > monies to leading banks and financial institutions. The Financial > Times last week noted the highly favorable terms granted to securities > traders by the Fed, which has emerged as one of the financial sector’s > biggest customers. > > Citing officials and industry executives, the newspaper concluded: > “Wall Street banks are reaping outsized profits by trading with the > Federal Reserve, raising questions about whether the central bank is > driving hard enough bargains in its dealings with private sector > counterparties.” > > Major banks are also set to collect nearly $1 billion in fees from the > Fed for their role in breaking up the failed insurance giant American > International Group (AIG). The Wall Street Journal, which calculated > the figure, noted that this “would represent one of Wall Street’s > biggest pay days.” Morgan Stanley, set to collect up to $250 million, > is among the largest beneficiaries. Goldman Sachs, Bank of America, > and JPMorgan Chase are also expected to cash in through advisory > services and underwriting assignments. > > AIG stock rose 18 percent last Friday after the insurer and financial > services company—now 80 percent government-owned—reported an > unexpected second quarter profit of $1.82 billion. The profit was > AIG’s first since late 2007. Executives reported that it was due to > parts of its business stabilizing as well as a favorable accounting > change. > > AIG also announced that it was paying $249 million in so-called > retention bonuses to executives for the second half of 2009. This > includes $93 million for its Financial Products division, whose > speculation in derivatives led to the company’s near-collapse last > year and a $173 billion government bailout. The firm’s entire > retention program is set to cost more than $1 billion over the next > three years. > > The announcement, made just five months after the public furor over > AIG’s bonus payments to those responsible for bankrupting the company, > bore a provocative character and reflected the brazenness of the > financial oligarchy. Late last month, a report issued by New York’s > attorney general showed that nine leading banks and financial > institutions receiving government bailout money paid out bonuses > totaling $33 billion last year. Six of the nine paid out more in > bonuses than they made in profits. (See: “Billions in bonuses for > bailed-out bankers”) > > One of the firms listed in the report, Wells Fargo Bank, last week > announced that it was awarding its four senior executives pay rises of > between 400 to 600 percent. CEO John Stumpf will now receive a > $900,000 base salary and $4.7 million in company stock. The massive > salary increases are designed to evade federal rules limiting bonus > payments for companies holding TARP bailout money. These mandated > limits, as Wells Fargo has now demonstrated, were never more than > token measures promoted by Democratic congressmen as a means of > covering themselves in the face of mounting public anger. > > The socially destructive activities of the banks and financial > institutions are continuing to inflict severe hardship on broad > sections of the population. > > Credit for consumers and small business owners remains either > unavailable or too expensive. The Federal Reserve reported Friday that > consumer credit in the US declined in June for the fifth straight > month. Banks have also hiked their fees and charges, > disproportionately affecting low-income earners. > > The Financial Times yesterday reported that research company Moebs > Services found US banks stood to collect $38.5 billion in customer > overdrafts this year. “The crisis has prompted many banks to lift > charges on overdrafts and credit cards in order to boost profits,” the > Financial Times noted. “The most cash-strapped customers are the > hardest hit by such fees, with 90 percent of overdraft revenues coming > from 10 percent of the 130 million checking accounts in the US. > Regular use of overdrafts is most common among consumers with low > credit scores, Moebs discovered.” > > While the major banks, bolstered by trillions of dollars in government > cash and subsidies, are reporting higher earnings, American workers > are suffering a drastic fall in wages. Commerce Department data > released August 4 showed a 4.7 percent fall in wages and salaries in > the twelve months to June—the largest decline since records began in > 1960. Data also showed reduced personal income and consumer spending. > > Edmund Phelps, a Nobel Prize-winning economist at New York’s Columbia > University, responded to the Commerce Department figures by telling > Bloomberg Television: “Households are going to have to do an awful lot > of rebuilding of their wealth. Even if that rebuilding goes on at a > pretty good clip, it will take 12 or 15 years for households to get to > the wealth level that they had several years ago.” --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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