New Year, New Bank Failures

In 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. 

On this first Friday of the New Year,only two banks were shut down. According to the BlogSpot the Bank Blog: 

 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. 

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.” 

Below are several links to different interactive maps of bank closures: an WSJ interactive map of the banking crisis since 2008, a version by, 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. 



Portal Seven

Bank infoSecurity 

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. 

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? 

For those of you unfamiliar with Chapter 9, Title 11, of the United States Code, the following is a short description taken from Wikipedia: 

“Chapter 9, Title 11 of the United States Code is a chapter of the United States Bankruptcy Code, available exclusively to municipalities and assists them in the restructuring of debts. Most famously, Chapter 9 was used by Orange County, California in 1994 to adjust its debts. 

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 mandamus, and compel the municipality to raise taxes. During the Great Depression, this approach proved impossible, so in 1934, the Bankruptcy Act was amended to extend to municipalities.[1][2] 

The 1934 Amendment was declared unconstitutional in Ashtonv. Cameron County Water District,;  [3] 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).[4] Chapter IX was largely unchanged until it was amended in 1976 in response to New York City's financial crisis.[5] The changes made in 1976 were adopted nearly identically in the modern 1978 Bankruptcy Code as Chapter 9.” 

Therefore, if the 112thCongress refuses to assist states this year, their “tough love” approach may include modifying Chapter 9, to allow states to reorganize, too. 

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. 

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. 

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. 

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. 

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. 

Let’s hope the benefactors of our cash flows prefers their biggest borrower and financial liability becoming this new, edgy, erratic, 21st century emerging America economy versus the former, stable, predictable, 20th century American middle class.

Votes: 0
E-mail me when people leave their comments –

You need to be a member of Global Risk Community to add comments!

Join Global Risk Community


  • Dear Mr Marvin Clark


    Good afternoon


    I wish you a very happy new year 2011 so is there anyone will be interested to start-up a new international banking into in our Madagascar country ? Looking for investors who have an EBITDA $USD 10,000,000 minimum, the ENERGY BANK MADAGASCAR is seeking $USD 8 Billion.

    You are welcome if you have this sum, the business plan for that is available once you will be accepted my proposals, and there are so many investors who are ready to invest immediately !!!!



    Prince Tahiry NDRIANALINAIVO

This reply was deleted.

    About Us

    The GlobalRisk Community is a thriving community of risk managers and associated service providers. Our purpose is to foster business, networking and educational explorations among members. Our goal is to be the worlds premier Risk forum and contribute to better understanding of the complex world of risk.

    Business Partners

    For companies wanting to create a greater visibility for their products and services among their prospects in the Risk market: Send your business partnership request by filling in the form here!