112th - Blog - Global Risk Community2024-03-29T10:59:39Zhttps://globalriskcommunity.com/profiles/blogs/feed/tag/112thNew Year, New Bank Failureshttps://globalriskcommunity.com/profiles/blogs/new-year-new-bank-failures2011-01-09T14:23:33.000Z2011-01-09T14:23:33.000ZMarvin Clarkhttps://globalriskcommunity.com/members/MarvinClark<div><p class="MsoNormal"><b><span style="font-size:16pt;font-family:Georgia, serif;">I</span></b><span style="font-family:Georgia, serif;">n 2010, we witnessed 157 banks closed by the FDIC. They were either taken over by stronger hands or liquidated and depositors were given back their deposits.</span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">On this first Friday of the New Year,only two banks were shut down. According to the BlogSpot</span> <a href="http://bankpred.blogspot.com/"><i><span style="font-family:Georgia, serif;">the Bank Blog</span></i></a><i><span style="font-family:Georgia, serif;">:</span></i><i><span style="font-family:Georgia, serif;"> </span></i></p><p class="MsoNormal"><i><span style="font-family:Georgia, serif;"><span> </span> “<span>The "honor" of the first bank to fail in 2011 belongsto First Commercial Bank of Florida based in Orlando. …It had approximately $598.5 million in total assets and $529.6 million in total deposits was closed. First Southern Bank of Boca Raton, FL has agreed to assume all deposits and acquired most of the assets. In addition, they have entered into a loss sharing agreement with the FDIC.</span></span></i><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><i><span style="font-family:Georgia, serif;">The second bank to fail this week is Legacy Bank of Scottsdale, AZ. … Legacy Bank had approximately $150.6 million in total assets and $125.9 million in total deposits was closed. It was acquired by Enterprise Bank & Trust of St. Louis, MO raising their asset level to over $2.5 billion, a roughly 6% increase.”</span></i></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">Below are several links to different interactive maps of bank closures: an WSJ interactive map of the banking crisis since 2008, a version by Bankrate.com, then, my personal favorite, Portal Seven, and finally, Bank info Security’s Failed Banks and Credit Union (24 CU’s shuffled off this mortal coil in 2010) interactive maps.</span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">WSJ</span></p><p class="MsoNormal"><a href="http://graphicsweb.wsj.com/documents/Failed-US-Banks.html"><span style="font-family:Georgia, serif;">http://graphicsweb.wsj.com/documents/Failed-US-Banks.html</span></a></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">Bankrate</span></p><p class="MsoNormal"><a href="http://www.bankrate.com/finance/savings/map-of-failed-banks.aspx"><span style="font-family:Georgia, serif;">http://www.bankrate.com/finance/savings/map-of-failed-banks.aspx</span></a></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">Portal Seven</span></p><p class="MsoNormal"><a href="http://portalseven.com/banks/Failed_Banks_Map_2011.jsp"><span style="font-family:Georgia, serif;">http://portalseven.com/banks/Failed_Banks_Map_2011.jsp</span></a></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">Bank infoSecurity</span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;"><a href="http://www.bankinfosecurity.com/articles.php?art_id=2092">http://www.bankinfosecurity.com/articles.php?art_id=2092</a></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">Why the redundancy? It’s called research and it protects analysts and analysis from becoming lazy and eaten alive by “Black Swans”. Besides, variety is the spice of life.</span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">The foremost question for 2011 is which group will hit the 100 institution finish line first; the number of FDIC bank closures or the number of municipalities to default on bond payments or file for reorganization under Chapter 9?</span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span style="font-family:Georgia, serif;">For those of you unfamiliar with Chapter 9, Title 11, of the United States Code, the following is a short description taken from Wikipedia:</span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><b><i><span style="font-family:Georgia, serif;color:#000000;">“Chapter 9, Title 11 of the United States Code</span></i></b></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;">is a chapter of the</span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><a href="http://en.wikipedia.org/wiki/Bankruptcy_in_the_United_States" title="Bankruptcy in the United States"><i><span style="font-family:Georgia, serif;color:#0645ad;">United States Bankruptcy Code</span></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;">, available exclusively to municipalities and assists them in the restructuring of debts. Most famously, Chapter 9 was used by</span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><a href="http://en.wikipedia.org/wiki/Orange_County,_California" title="Orange County, California"><i><span style="font-family:Georgia, serif;color:#0645ad;">Orange County, California</span></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;">in 1994 to adjust its debts.</span></i></span><i><span style="font-family:Georgia, serif;"> </span></i></p><p class="MsoNormal"><span><i><span style="font-family:Georgia, serif;color:#000000;">Previous to the creation of Chapter 9 bankruptcy, the only remedy when a municipality was unable to pay its creditors was for the creditors to pursue an action of</span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><a href="http://en.wikipedia.org/wiki/Mandamus" title="Mandamus"><i><span style="font-family:Georgia, serif;color:#0645ad;">mandamus</span></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;">, and compel the municipality to raise taxes. During the</span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><a href="http://en.wikipedia.org/wiki/Great_Depression" title="Great Depression"><i><span style="font-family:Georgia, serif;color:#0645ad;">Great Depression</span></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;">, this approach proved impossible, so in 1934, the Bankruptcy Act was amended to extend to municipalities.</span></i></span><a href="http://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Code#cite_note-0"><i><sup><span style="font-family:Georgia, serif;color:#0645ad;">[1]</span></sup></i></a><i><sup><span style="font-family:Georgia, serif;color:#0645ad;"><a href="http://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Code#cite_note-1">[2]</a></span></sup></i><i><sup><span style="font-family:Georgia, serif;color:#000000;"> </span></sup></i></p><p class="MsoNormal"><span><i><span style="font-family:Georgia, serif;color:#000000;">The 1934 Amendment was declared unconstitutional in</span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><a href="http://en.wikipedia.org/w/index.php?title=Ashton_v._Cameron_County_Water_District&action=edit&redlink=1" title="Ashton v. Cameron County Water District (page does not exist)"><i><span style="font-family:Georgia, serif;color:#cc2200;">Ashtonv. Cameron County Water District</span></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;">,; </span></i></span><a href="http://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Code#cite_note-2"><i><sup><span style="font-family:Georgia, serif;color:#0645ad;">[3]</span></sup></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;">however, a similar act was passed again by Congress in 1937 and codified as Chapter X of the Bankruptcy Act (later redesignated as Chapter IX).</span></i></span><a href="http://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Code#cite_note-3"><i><sup><span style="font-family:Georgia, serif;color:#0645ad;">[4]</span></sup></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;">Chapter IX was largely unchanged until it was amended in 1976 in response to New York City's financial crisis.</span></i></span><a href="http://en.wikipedia.org/wiki/Chapter_9,_Title_11,_United_States_Code#cite_note-4"><i><sup><span style="font-family:Georgia, serif;color:#0645ad;">[5]</span></sup></i></a><span><i><span style="font-family:Georgia, serif;color:#000000;"> </span></i></span><span><i><span style="font-family:Georgia, serif;color:#000000;">The changes made in 1976 were adopted nearly identically in the modern 1978 Bankruptcy Code as Chapter 9.”</span></i></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">Therefore, if the 112<sup>th</sup>Congress refuses to assist states this year, their “tough love” approach may include modifying Chapter 9, to allow states to reorganize, too.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">Katy-bar-the-door, if foreign creditors of the U.S. ever decide to perform a “tough love” credit analysis of America’s annual deficit spending, over the last 10 years, by both political parties.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">The U.S. profile worsens with ongoing maintenance costs of rising poverty rates and persistently high unemployment, mutating employment characteristics and opportunities; an aging population, exploding medical costs and 50 million uninsured citizens (while dead birds fall from thesky and dead fish wash ashore, mystifying officials); and a slowly crumpling, complex,and very expensive infrastructure.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">As disturbing as our internal footprint is, our annual trillion dollar expenditure for homeland security and open-ended global military commitments, housing over 800 active operating bases, rests precariously upon on stagnant personal incomes and falling tax receipts. The Fed Chairman, Ben Bernanke, instructs America to be patient; jobs will return in four or five years.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">Educational test scores, a mighty predictive tool forecasting future individual or collective wealth, explicitly from the quickest growing population segment, are out of synch with societal needs to remain competitive, globally, this century.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">Our soured social and political discourse and extreme political recklessness is everywhere in the air and on display before our allies, trading partners, and foreign lenders of last resort to witness.</span></span><span style="font-family:Georgia, serif;"> </span></p><p class="MsoNormal"><span><span style="font-family:Georgia, serif;color:#000000;">Let’s hope the benefactors of our cash flows prefers their biggest borrower and financial liability becoming this new, edgy, erratic, 21<sup>st</sup> century emerging America economy versus the former, stable, predictable, 20<sup>th</sup> century American middle class.</span></span></p></div>