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The Truth Behind The FDIC's "Problem Bank Shrinking" Report

Tyler Durden's picture




 

From Peter Tchir of TF Market Advisors

The report that the FDIC list of problem banks fell to 865, the first decline in the number of problem banks since 2006 seems to have helped the market. 

In 2006 there were 50 problem banks and in 2007 there were 76.  So that puts 865 in some perspective.

The data also seems to be a bit misleading.  Did any banks actually move from the "problem" list to a better list?  If the entire 23 bank decline was from banks improving, that would be good.  But I don't think that is the case.  The number of insured banks declined from 7,574 to 7,513.  So the number of banks covered by the report declined.  And that makes sense since 22 failed and 39 were absorbed via mergers.  So the number of problem banks declined by 23, and 22 banks failed.  I assume once a bank fails it goes of the "problem" list since it is not covered by this report?  So at best, 1 bank moved off?  Yet of the 39 mergers, were those all of non problem banks?  I find that hard to believe.  I suspect that if the list was disclosed, we would find that not a single bank migrated from the "problem" list to a better list on its own.  And that some new banks were actually added to the problem list. 

They don't include a list of the names, or the migration, but I don't think this data is as compelling as the headline.

Source: FDIC

 

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Tue, 08/23/2011 - 22:08 | 1593106 AngryVoter
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details details, there are less problem banks - print the headline - all systems go.

Tue, 08/23/2011 - 22:54 | 1593345 AldousHuxley
AldousHuxley's picture

When all banks default, many problems are solved:

  • No more problem banks
  • No more investment bankers working 100 hours; they can finally go make something
  • No more financial industry's control of US government
  • No more Federal Reserve (it is a bank too)
  • No more wall st. fat cats
  • No more wall st. bonuses
  • No more robo signers
  • No more flash crash
  • No more bankster bailouts
  • No more counterparty risk (all counterparties are dead)
  • No more derivatives aka. financial weapons of mass destruction
  • No more subsidized loans driving up asset prices (homes, education)
  • No more rewarding Jews living off of money changing (ie. Madoff vs. Einstein)
  • No more debt financed wars because of end to petro dollars
  • No more bank runs
  • No more real estate bubbles
  • No more sleepless nights worrying about wall st. news
  • No more ZH???
Tue, 08/23/2011 - 23:50 | 1593564 Cliff Claven Cheers
Cliff Claven Cheers's picture

Take your Stink Stick ass somewhere else.

Sounds like you might be jealous of the Jews that know how to make money.  Jew envy?

Wed, 08/24/2011 - 00:54 | 1593845 SAME AS IT EVER WAS
SAME AS IT EVER WAS's picture

Yeah, the jew comment was'nt right (targeting people based on their nationality)! But the way I see it, regardless of race, all of wall st. is "jewish"-lying,cheating,stealing,rotten,disgusting,asshole-duchebag,bloodsucking vultures.

Wed, 08/24/2011 - 02:07 | 1594013 phyuckyiu
phyuckyiu's picture

Lets see.... passing a law on Christmas Eve when everyone in congress was home that lends us our own money at interest counts as 'knowing how to make money' .  It's ok though, you sucked the dog dry, it can't give you many billions a year anymore without buying 70% of it with it's own printing press. There is no backup sugar daddy either.

Wed, 08/24/2011 - 17:31 | 1596791 AldousHuxley
AldousHuxley's picture

Jewish money making is like making money off of QE. You think you are making money, but because you cheat, in the end you end up with nothing.

 

How about them Rabbis selling organs in black market huh?

How about Madoff's ponzi scam?

How about Greenspan's ponzi scam?

How about shylock in shakespeare's Merchant of Venice?

 

 

Christian empires saught to forbid usury because rich who were in a position to take advantage of the situation became the money-lenders when the ever-increasing tax demands in the last declining days of any Empire which eventually destroyed the peasant class by reducing tenant-farmers to serfdom. It was evident that usury meant exploitation of the poor.[7]

It is never too late to make money the honest way. World despises Jews because their history of uncontrolled greed time after time.

 

 

Tue, 08/23/2011 - 22:09 | 1593107 PicassoInActions
PicassoInActions's picture

1 more , one less, we are so screwed.... 

 

Tue, 08/23/2011 - 23:19 | 1593425 TruthInSunshine
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Isn't it pathetic that the Main Stream Media just reports whatever is scripted for them by various government officials (and other nefarious sources)?

Shouldn't alleged JOURNALISTS question everything they're told or given, and dig deep to discover conflicting, misleading and false information and lies?

Is it too much to ask that the Lame Ass Stream Media do what Zero Hedge, in just the latest of MANY examples, did here today?

Yes. Sadly, it is too much to ask.

We're watching a Republic crumble, and an alleged independent media as an 'institution' lead the rot.

Everything reported by the government and its proxy media outlets is LIES & PROPAGANDA designed to keep the lid on the rapidly deteriorating financial, economic and socia lconditions in the United States.

Think I'm being hyperbolic?

I could cite a list here of the incredibly misleading and outright false statements reported over the last 12 or 24 months, not just by government agencies, but by the proxy MSM, but do I really need to? Anyone with open eyes & ears knows this already.

It's all an elaborate CONfidence game...the middle class of the U.S. and in many European Nations is being wiped out, while governments lie, spin, extend and pretend.

PONZI on, USSA!!!

Tue, 08/23/2011 - 23:33 | 1593573 Cliff Claven Cheers
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Why don't you start a blog?

Tue, 08/23/2011 - 23:38 | 1593591 TruthInSunshine
TruthInSunshine's picture

 

 

Why when there's Zero Hedge, bitch -

- we're all Tyler Durden, and you have to fight now.

 

Tue, 08/23/2011 - 23:49 | 1593655 Cliff Claven Cheers
Cliff Claven Cheers's picture

Usually you have good info so it was a compliment, squirt stick.

Wed, 08/24/2011 - 03:36 | 1594140 slewie the pi-rat
slewie the pi-rat's picture

no, it wasn''t, asswipe

either get real or you'll wish ya had

trust me!

Wed, 08/24/2011 - 07:41 | 1594397 oogs66
oogs66's picture

it is amazing that fact checking seems to have been thrown out the window, and it is all about the headlines.  which more and more must be written with the algo's in mind

Tue, 08/23/2011 - 22:10 | 1593117 Reese Bobby
Reese Bobby's picture

No Bank, No Problem.

Tue, 08/23/2011 - 22:13 | 1593129 zorba THE GREEK
zorba THE GREEK's picture

If we bring back the sound practice of mark to market, I wonder how many

problem banks we would have then. The whole banking system is a charade and

any one with a brain can tell almost all big banks are insolvent.

Tue, 08/23/2011 - 22:26 | 1593183 chrisd
chrisd's picture

good analysis, thanks

Tue, 08/23/2011 - 22:27 | 1593188 Aguadulce
Aguadulce's picture

I'm assuming that these numbers are much like the reported unemployment figures...the 865 on the list are still seeking to be "good" banks....the others simply drop off and aren't included anymore.

Tue, 08/23/2011 - 22:30 | 1593202 rosiescenario
rosiescenario's picture

..survivorship bias....also applies to stock indexes when taken over a long time period....

Tue, 08/23/2011 - 22:33 | 1593214 HungrySeagull
HungrySeagull's picture

I say this.

I don't do FDIC banks, period. Only Credit Unions.

 

FDIC has been bust for so long now it's surreal to me to even consider what they will have left to handle a truly failed bank like say... Citi or whatever.

 

I call BS to anything that FDIC allows the public to see. Why? IF they were truly transparent and make precise information on specific problem banks by name, the Population of the United States will make a decsion to withdraw everything and shift to good banks not on the problem list. In other words a massive bank shift or run.

After a while the bad banks are cleaned out and sent downriver to the garbage heap yah?

Tue, 08/23/2011 - 22:37 | 1593249 zorba THE GREEK
zorba THE GREEK's picture

@HS   FDIC is backed by the U.S. Treasury which is backed by the FED. FDIC will never run out of fiat 

dollars to cover bank deposits and if things get really bad like in 2008-2009, the treasury will back all

bank deposits and money markets 100% with no limit. They been there and they done that.

Tue, 08/23/2011 - 22:56 | 1593354 Jasper M
Jasper M's picture

Let me offer a small correction: They will never run out of Credits. They can EASILY run out of actual FRNs, there's only about $55Billion on the planet, nowhere Near enough to cover a full system drawdown, AND they take Way longer to print than people think. Estimates of 80 years, at full bore, to cover the current outstanding money supply pits.

Wed, 08/24/2011 - 01:49 | 1593964 Moe Howard
Moe Howard's picture

So if we all demanded physical FRNs we could crash the system? Couldn't they rubber stamp some more zeros on the bills they have?

Wed, 08/24/2011 - 02:37 | 1594066 StychoKiller
StychoKiller's picture

Perhaps we could see your face on the $30,000 FRN! :>D

Wed, 08/24/2011 - 05:48 | 1594273 cossack55
cossack55's picture

Sub-contracting to China....DUH????  Overstocked in a week.

Wed, 08/24/2011 - 07:16 | 1594365 foofoojin
foofoojin's picture

 $55,000,000,000 divided by 312,000,000 people in America is only $176. I can see  a day where banks limit cash withdraws to 50 a day.

US gold held. 287,000,000 oz   divided by 312,000,000 people in America is only $1655 or almost an oz. I can see a day where it is a crime to own more then an once.

If you could only use cash to buy gold. it would take 9.4 cycles of gobble it all up.  so a bank run followed by a gold run would never have a  chance of working. so you need to have your cash and gold/silver in your hands before the crash. not after.

however if one is still able to use checking/savings accounts to buy gold. then we look at federal monetary base.  2,672,000,000,000 divided by 312,000,000 people is $8564 or we have plenty of money to buy all the gold in the US 4 times over.  gold is still cheap. very cheap. when its two to one ratio. thats when SHTF?

 

 

Tue, 08/23/2011 - 22:31 | 1593219 ihedgemyhedges
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Another Zero Hedge conspiracy..................geez.  Stay tuned to Fast Money tomorrow....................................

Tue, 08/23/2011 - 23:08 | 1593432 udecker
udecker's picture

Is it sad that I can't tell the difference between sarcasm - and spam?

Wed, 08/24/2011 - 03:47 | 1594150 slewie the pi-rat
slewie the pi-rat's picture

and you post that under what seems to me to be an obvious joke~~a funny~~because...?

Tue, 08/23/2011 - 22:32 | 1593224 Atomizer
Tue, 08/23/2011 - 22:38 | 1593253 tmosley
tmosley's picture

I seem to recall hearing about one bank that up and quit.  They just shut their doors.

Quick Google search brought this one up: http://www.times-georgian.com/view/full_story/13154899/article-Bank-clos...

I wonder if they were the other one?

Tue, 08/23/2011 - 23:05 | 1593409 narnia
narnia's picture

Main Street Bank of Texas was on the problem list & they surrendered their charter a couple weeks ago.

http://online.wsj.com/article/SB10001424053111904480904576498442951766826.html

Wed, 08/24/2011 - 03:50 | 1594157 JimBowie1958
JimBowie1958's picture

It is interestingthat this bank is very profitable and focused 90% of its loans to profitable small businesses and so the FDIC is harrassing them to make more loans and reduce the proportion of its loans from a profitable small business sector to riskier loans, what home mortgages?

So if this is an example of why so many of our banks are in trouble, it would appear that the FDIC has been driving much of the instability by making bureaucratic, pencil-headed demands on banks that has reduced their stability and profitability.

How ironic.

Wed, 08/24/2011 - 10:28 | 1594941 narnia
narnia's picture

Dodd-Frank imposes a huge compliance burden on small banks.

FDIC has materially increased rates on all banks.  Rather than underwrite the insurance with a special kicker for systemic or TBTF risk, they socialized this risk to all banks (and are probably still short the real number).

The effect of these is to encourage consolidation or outright charter surrender.  It provides a market preference towards TBTF, rather than away from it.  

This isn't unusual.  Most attempts by lawmakers to fix problems end up accomplishing the opposite of what they set out to do or create other unintended problems.

Tue, 08/23/2011 - 22:53 | 1593269 myztix
myztix's picture

 

The number of insured commercial banks and savings institutions reporting quarterly financial results declined to 7,513, from 7,574 in first quarter 2011. Two new charters were created to absorb failed institutions during the second quarter, while 39 institutions were absorbed by mergers, and 22 insured institutions failed. This is the smallest number of failures in a quarter since first quarter 2009. The number of institutions on the FDIC’s “Problem List” declined for the first time since third quarter 2006. At the end of the second quarter, there were 865 “problem” institutions, down from 888 at the end of the first quarter. Total assets of “problem” institutions declined from $397 billion to $372 billion. The number of full-time equivalent employees reported by insured institutions—2,104,698—was 12,124 (0.6 percent) higher than in first quarter 2011.

 

I agree we don't know what banks are what, but I think the take away could be that it's getting lower and lower regardless. Perhaps it will eventually merge/fail so there there's only going to be 1 bad bank left..

guess what it is! It's not BAC..

Tue, 08/23/2011 - 22:56 | 1593276 dwdollar
dwdollar's picture

Regardless, the fact they don't disclose the list should thoroughly discredit it AND them.  Why bother having a list???

"Sorry to inform you, but we're including you on the list that nobody sees.  We're confident it will encourage you to clean up your imbalances.  But again, we aren't disclosing it, so don't worry."

Tue, 08/23/2011 - 22:45 | 1593291 max2205
max2205's picture

My ZH distrust of MSM radar went off when I saw that. Did the math a d went about my life. Thanks ZH and ZH 'ers

Tue, 08/23/2011 - 22:45 | 1593292 myztix
myztix's picture

They will never disclose the list willingly.

The silver lining is: there's less problematic banks to worry about..

I can sleep at night now!

Tue, 08/23/2011 - 23:34 | 1593579 Cliff Claven Cheers
Cliff Claven Cheers's picture

Has anyone bothered to send a Freedom of Info request to obtain the list?  Or is the list exempt?

Tue, 08/23/2011 - 23:03 | 1593400 bnbdnb
bnbdnb's picture

Total percentage of banks on problem list prior to report: 11.7%
Total percentage of banks on problem list after report: 11.5%

LOL. Way to go AP!

Tue, 08/23/2011 - 23:45 | 1593635 Havana White
Havana White's picture

This "great news" was written for maximum positive effect, released at a strategically advantageous moment, and then reported ad nauseum.  Of course, there would be those who bought XLF and such.  Make no mistake -- these listeners and readers invested on a lie.  They were quite plainly defrauded.  Chalk up yet another criminal act.

Wed, 08/24/2011 - 00:41 | 1593816 lunaticfringe
lunaticfringe's picture

Anybody that bought this market on that news- is an idiot. Algos and banks bought.  Shorts forced to cover again. That's it. You can almost see those 15-20 million jobs coming back. All that home inventory being sold. Taxes paying off the debt principal. Buy the market now or get priced out forever! MUhahahahahahahaha!

Wed, 08/24/2011 - 01:46 | 1593956 glenlloyd
glenlloyd's picture

to expect anything less from a govt report is foolishness, deception is and has been the order of the day for a long time.

Wed, 08/24/2011 - 07:57 | 1594429 somethingelse
somethingelse's picture

23 less problems banks  less 22 failed banks.....1 bank fixed it's problems and is off the troubled list....woo-hoo  green shoots baby!!!

Wed, 08/24/2011 - 09:53 | 1594801 AcidRastaHead
AcidRastaHead's picture

Good point, they don't explain any of the reasons they moved off the list, like the unemployment rate that conveniently gets better with population increase adjustments and ignoring kind of a large number of unemployed that "stopped looking".

Wed, 08/24/2011 - 10:47 | 1595059 MFL8240
MFL8240's picture

The US financial sewer cannot stand on its own record so they must lie by posting misleading, false and fraudulent information and distorted reports to fake out the sheep.   

Thu, 08/25/2011 - 00:56 | 1598211 hazeL
hazeL's picture

This is the first fall in 5 years. The Federal Deposit Insurance Corp.'s list of banks most at an increased risk to crash is smaller than it was last quarter and it would definitely a good news if the record has been properly and accurately reported.  The FDIC remains cautiously optimistic at the signs of progress. It's a funny day when the banks need a personal loan to survive but it's absoluely alarming for it's depositors and stock holders because that might cause them big troubles.

Thu, 02/16/2012 - 04:08 | 2165134 AnnaShchur
AnnaShchur's picture

Well, actually, federal regulators are closely monitoring events in Europe. Many banks there are saddled with large holdings of bonds from troubled nations such as Greece, Spain and Italy. But regulators in the decentralized European Union have less power to stem a crisis should it arise. And of course, this crisis also affects the payday advances provided by American banks. On Friday, for example, Bank of America said it was dismissing 3,500 workers, on top of the 2,500 shed earlier this year…. And some U.S. institutions still must work through post-recession issues….What we, common people can do with it? Choose a new government or just hope for a better future?

Fri, 04/27/2012 - 02:03 | 2379343 David23
David23's picture

Well, if the markets were free and honest, we would never have seen the rise of derivatives and CDO's - banks and investors would have been too terrified at the possibility of failure to buy into those schemes but with government guarantees behind them - the banksters said - lets roll the dice! This is why so many Americans now use 1 hour loans for bad credit. Actually, we should not repeat the propaganda that wants to lay blame where the politicians want it to be - trying blaming government support of the finance industry for our current situation - it is reality!

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