In case you didn’t see it, the last few days have seen some interesting things happen over in FDIC land.
Last week, the FDIC took down two micro banks. These small institutions basically imploded in one quarter, a pattern that has not been the norm in terms of bank closures. Most are allowed to struggle along for as many as 5 to 8 quarters before facing the inevitable. These are different. Disaster strikes quickly. The pattern first appeared with the demise of La Jolla Bank in San Diego when a large fraction of their commercial R.E. loans went sour en masse. The question I asked at the time was “how many other banks on the edge are looking at ‘walk away obligor’ risk?”
Last week tiny Arcola Homestead Savings Bank in Illinois and First National Bank of Rosedale, MS also did dramatics power dives to oblivion. Also last week the FDIC closed long struggling Tier One Bank in Lincoln, Nebraska.
You can look at them on IRA’s Casualty List Forensics page if you like.
http://us1.institutionalriskanalytics.com/pub/Forensic.asp
In case you didn’t see it, the last few days have seen some interesting things happen over in FDIC land.
Last week, the FDIC took down two micro banks. These small institutions basically imploded in one quarter, a pattern that has not been the norm in terms of bank closures. Most are allowed to struggle along for as many as 5 to 8 quarters before facing the inevitable. These are different. Disaster strikes quickly. The pattern first appeared with the demise of La Jolla Bank in San Diego when a large fraction of their commercial R.E. loans went sour en masse. The question I asked at the time was “how many other banks on the edge are looking at ‘walk away obligor’ risk?”
Last week tiny Arcola Homestead Savings Bank in Illinois and First National Bank of Rosedale, MS also did dramatics power dives to oblivion. Also last week the FDIC closed long struggling Tier One Bank in Lincoln, Nebraska.
You can look at them on IRA’s Casualty List Forensics page if you like.
HI JJ, (and Hi Dennis, Chris) et al,
Thanks for bringing this to my attention.
What’s been the case is some sort of compliance with CRA and/or the economic development part that competitors need to have to pony up for the Fed.
And sadly what I’ve discerned now after more than 30 years after passing CRA, if at that time by Pres Carter it was done in good faith, now it’s been hijacked for contemporary feudalism. Sadly too the economic development part could be used to spur new or renew industrial development in blighted areas, however economic development as is characterized by the senior CRA people at the BigFinancials, is not being used other than for things like supermarket subsidy or strip mall in an area where CRA housing/home building is being done – so as to keep the economy in blighted, contracted condition to keep US compliant with the G20 contraints for the US economy.
CALLING OUT THE EMPEROR IN UNDERWEAR
The contemporary feudalism is having ‘homes’ or some other large tract res development but the banks tacitly or defacto in some way control the ground, the property, etc and the people on in the housing many have some sort of marginal employment. Not too different also from a contemporary plantation. It’s really insideous.
The only thing that will change what I’ve seen is when they lend and/or will partner fairly with me and my clean steel company that also co-gens electricity and disintegrates waste streams. In NY and any other urban area, this solves so many issues, however even fairly high up CRA people are either too flimsy or too co-opted by the feudal-old world ways of our BigFinancials and the Fed.
Also Keep in mind both the regulators and competitors know about these minority owned institutions and some other bigger player is coveting what was at this ‘shop’ even though it was blown up. Those loans and ‘turf’ can be divvy’d up among other players which need something or some sort of compliance with CRA.
So if the regulators decided to liquidate it, these loans still go over to competitors but behind closed doors, so we have no idea what’s happened at what price. We also have no idea why the place was blown up. All in all, it’s the sort of calculated discretion that also is deleterious to the system.
I live in Morningside. Although Carver has a high overhead and there are some logical reasons like it’s operating in an expensive, large city, it’s been locally complained about (early 90s) that it isnt making loans in the community. Chase at that point and perhaps now JPMC is a big investor in the capital of this thrift. Consider a plantation. Understand all of that sort of barter, etc and that economic and social system. CRA and in some respects BigFinancials and some of their business has eroded to that.
You can FOIA request for it but info will be redacted.
Andrea Psoras
New York, NY