By MARCY GORDON, AP Business Writer Marcy Gordon, Ap Business Writer – Fri Sep 25, 5:39 pm ET
WASHINGTON – Regulators on Friday shut down Atlanta-based Georgian Bank, the 95th U.S. bank to fail this year as loan defaults rise in the worst financial climate in decades.
In coming months, more banks are expected to buckle under the weight of commercial real estate and other loans that go sour. Those failures could imperil the insurance fund for deposits, already at the lowest point in nearly 20 years.
The Federal Deposit Insurance Corp. took over Georgian Bank, with about $2 billion in assets and $2 billion in deposits as of July 24. First Citizens Bank and Trust Co., based in Columbia, S.C., agreed to assume the assets and deposits of the failed bank. Georgian Bank's five branches will reopen Monday as offices of First Citizens Bank.
In addition, the FDIC and First Citizens Bank agreed to share losses on Georgian Bank's roughly $2 billion in loans and other assets.
The failure of Georgian Bank is expected to cost the federal deposit insurance fund an estimated $892 million. The fund has been so diminished by the wave of collapsing banks that some analysts have warned it could sink into the red by year's end.
The fund fell 20 percent to $10.4 billion at the end of June. That's its lowest point since 1992, at the height of the savings-and-loan crisis. The FDIC estimates bank failures will cost the fund around $70 billion through 2013.
FDIC Chairman Sheila Bair said last week she is "considering all options, including borrowing from Treasury," to replenish the insurance fund. The FDIC is weighing several costly, and never before used, options for shoring up the fund: borrowing billions of dollars from healthy banks, imposing a special fee on the banking industry or tapping the agency's $500 billion credit line with the Treasury.
Another option would be for banks to pay their normal insurance fees in advance. But U.S. Comptroller of the Currency John Dugan said Thursday he was "very concerned" about the effect of such an upfront levy on the strained banking industry.
The FDIC is fully backed by the government. That means depositors' money is guaranteed up to $250,000 per account. And the agency still has billions in loss reserves — including $21.6 billion in cash — apart from the insurance fund.
Meanwhile, Treasury Department officials and federal bank regulators are weighing a fresh round of bailouts for banks that were deemed too small or too risky to qualify for earlier aid under the government's $700 billion financial rescue program. Representatives from Treasury, the FDIC and the House Financial Services Committee discussed the plan by phone Thursday, officials said.
Bank failures have spread nationwide, but the 19 in Georgia this year are the most of any state. That's a reflection of the depressed real estate market and of a glut of small community banks in the state.
Hundreds more banks are expected to fail nationwide in the next few years largely because of souring loans for commercial real estate. The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the highest number since June 1994, during the savings-and-loan crisis.
On Aug. 21, Guaranty Bank became the second-largest U.S. bank to fail this year after the big Texas lender was shut down and most of its operations sold at a loss of billions of dollars for the government to a major Spanish bank. The failure, the 10th-largest in U.S. history, is expected to cost the insurance fund an estimated $3 billion.
The sale of most of Austin-based Guaranty's operations to the U.S. division of Banco Bilbao Vizcaya Argentaria SA, Spain's No. 2 bank, marked the first time a foreign bank has bought a failed American bank during the current financial crisis.
And on Aug. 14, Colonial Bank, a big lender in real estate development, was shuttered and became the biggest U.S. bank to fail this year and the sixth-largest in U.S. history, with about $25 billion in assets. The government approved the sale of Montgomery, Ala.-based Colonial's $20 billion in deposits and about $22 billion of its assets to BB&T Corp. Colonial was a major lender to developers in Florida and Nevada and was hit hard by the collapse of the real estate market in those states.
Well fellers. Looks like we're out of this here recession, Obama really came through for us.
At least we saved the big ones, you know, the ones that took on all the unnecessary risk and malinvestment, the little guys, eh, who cares, shame on them for not using risky and questionable financial instruments.
Silly boy. You should know you protect your biggest contributors first.
custar
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Are the Geisterjagers over the top?
Well, let's just say "The Top" is barely a speck in our rear view mirror.
"That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of the United states who are peaceable citizens from keeping their own arms..."
Samuel Adams
Ave Caesar Obama! Tributituri ad moritus te salutant.
so you guys can't claim i'm a partisan douche bag, i made this photochop specifically for this thread
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He chose to use his name, Barack, for a reason. To identify, not with America -- you don't take the name Barack to identify with America. You take the name Barack to identify with what? Your heritage? The heritage, maybe, of your father in Kenya, who is a radical? Really? Searching for something to give him any kind of meaning, just as he was searching later in life for religion. - Glenn Beck
expecting a single person to end a recession within a year of being in office is quite amazing... why do people ***** so much about how slow recovery is?
__________________ hsilman- "sticks and stones may leave a bruise, but AK's will ****ing kill you."
expecting a single person to end a recession within a year of being in office is quite amazing... why do people ***** so much about how slow recovery is?
It only took us 8 years and several trillion to get into it, why can't Obama just get us out of it that simply?
apunkjunkie - "Sorry to burst your bubble, but less than 1% of the southern citizens owned slaves and out of that, most were treated fairly well. So no, slavery wasn't a big issue."
expecting a single person to end a recession within a year of being in office is quite amazing... why do people ***** so much about how slow recovery is?
Technically speaking, wouldn't the recession be over the moment we have a positive quarterly change in GDP?
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Overbear: better 10 innocent men be convicted, than a single guilty man go free to commit more crime. Overbear: I prefer that I be given a license to shoot anyone who would pick socialism or communism over the basic freedoms inherent to consumerism. MatrixBaller04 AKA EricS9652: I can guarantee something will happen between now and February 9th. Tha-Italian-Stallion: America is the same country who made a should be slave it's leader.... why the **** would I have any pride in that? Blake360: in highschool, my teacher's father worked for the CIA and she brought my class documents proving the Roswell crash was of extraterrestrial origin.
It is very possible to have a positive GDP change this quarter.
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Overbear: better 10 innocent men be convicted, than a single guilty man go free to commit more crime. Overbear: I prefer that I be given a license to shoot anyone who would pick socialism or communism over the basic freedoms inherent to consumerism. MatrixBaller04 AKA EricS9652: I can guarantee something will happen between now and February 9th. Tha-Italian-Stallion: America is the same country who made a should be slave it's leader.... why the **** would I have any pride in that? Blake360: in highschool, my teacher's father worked for the CIA and she brought my class documents proving the Roswell crash was of extraterrestrial origin.
expecting a single person to end a recession within a year of being in office is quite amazing... why do people ***** so much about how slow recovery is?
It's not because recovery is slow, but because of left-liberals saying the recession is over/likely over.
Why would certain companies contribute to 2 different competing parties?
Tax. Write. Off.
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“The several states composing the United States of America are not united on the principle of unlimited submission to their general government” - Thomas Jefferson
"There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him." – Robert Heinlein
Closed-bolt, because I can.
Repetition and Ridicule, the biggest tools of the Liberal.
At least we saved the big ones, you know, the ones that took on all the unnecessary risk and malinvestment, the little guys, eh, who cares, shame on them for not using risky and questionable financial instruments.
a lot of them did take on the same questionable loans the big banks did.
__________________ Abraham Lincoln- With malice toward none; with charity for all; with firmness in the right, as God gives us to see the right, let us strive on to finish the work we are in; to bind up the nation’s wounds; to care for him who shall have borne the battle, and for his widow, and his orphan — to do all which may achieve and cherish a just, and a lasting peace, among ourselves, and with all nations.
