Joel Bowman is managing editor of the Rude Awakening and author of its Weekend Edition. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
This missive comes from Taipei, Taiwan:
It’s a good thing this is only a sucker’s rally. If banks were closing down at this rate in a real bull market, we’d all be in serious trouble.
What kind of recovery, we wonder, permits the sixth largest bank failure in U.S. history? Colonial BancGroup, the flailing Montgomery lender that had 346 branches spread across Florida, Alabama, Georgia, Nevada, and Texas, joined 77 other banks so far in 2009 to find their way into the big bank home in the sky.
According to CNN, Colonial is “100 times larger than the typical bank to have failed this year.”
Some recovery. And one said to be led by financials, at that!
BB&T will snap up $22 billion of the fallen lenders assets, along with its deposits and branches, leaving approximately $3 billion in the lap of the Federal Deposit Insurance Corp. Some estimate the cost may be as high as $5 billion to $7 billion. It is a rare Friday these days when the FDIC can’t be seen boarding up a few straggling financial institutions late on their bills.
Says Sheila Bair, chairman of the FDIC, “The past 18 months have been a very trying period in the financial services arena.”
Consider that a sizable understatement. Last year, during what was considered the height of bank failures, the agency set aside $25 billion to cover what they saw as potential future losses. Now, less than 12 months later, the number of banks on the FDIC’s “troubled” watch list has jumped from 90 to no less than 305. The combined asset value of those “problem” banks? $220 billion.
Trying period, indeed.
Like we keep saying: it’s a good thing this is not a real recovery. If it was, we’d hate to see what the beginning of a depression looked like…
Agora Financial’s Rude Awakening
Rude Awakening, August 16, 2009