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I've had knowledge of the Indy Mac Bank takeover for about a week, and failed to post it. It was timely, but I've been overwhelmed by this blog, starting a new business, winding down the old business, investing in this "new depression era", three kids, a wife, 2 dogs, a bird, a ferret and 2 snakes (plus fish, parents and in laws). Burnout ensues. I only get to post about 40% of what comes across my (virtual) desk.

So, to make up for not passing the gossip, I will pass along some empirical innuendo. C. Peterson's blog has an interesting post surmising the extent of the implied haircut the FDIC is taking on IMB assets. It appears significant from Mr. Peterson's perspective. Remember, the FDIC is undercapitalized for the event that is coming. Taking over IMB is a big chunk for them to swallow (the 2nd largest bank failure to date, but I think that record will be broken soon), and they have four 12 course meals coming down the pike. Remember my post, The worst is behind us, unless massive bank failure is a bad thing. According to the WSJ: The collapse is expected to cost the Federal Deposit Insurance Corp. between $4 billion and $8 billion, potentially wiping out more than 10% of the FDIC's $53 billion deposit-insurance fund.

Well there are a few more banks coming. The regulators are saying that my local Senator, Chuck Schumer, is responsible for the collapse of IMB, by instigating a run on the bank. Well, that's debatable, but I'm going to give him a call anyway for I can see the logic in the statement. If he'll have me in such a manner, I'll go over the entire Asset Securitization Crisis Analysis, page by bage - and hopefully make him the most knowledgeable and educated politician on the subject, or maybe not.

Below, you will see where Huntington Bancshares and WaMu are most likely on the FDIC list. These companies score very poorly in the Eyles test as well (different spreadsheet).


  Countrwide has just been rescued (a temporary thing, I'm sure), which leaves Huntington Bancshares lonely at the top of the pile in regards growth in Texas ratio. For those who need a quick primer, from Wikipedia:

The Texas ratio is a measure of a bank's credit troubles, developed by Gerard Cassidy and others at RBC Capital Markets. It is calculated by dividing the value of the lender's non-performing loans by the sum of its tangible equity capital and loan loss reserves.

In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s. 


According to these growth measures and the historical validity of the Texas Ratio, as long as ratio growth measures remain constant these two banks may fail sometime in the fourth quarter.

This is just my unconfirmed opinion, but if the FDIC has to take over WaMu, it will put a severe financial strain on them that will hamper their ability to handle the other smaller banks that are bound to fail as the future unfolds. Without additional funding, the FDIC itself may fall victim to insolvency. I have not explicitly ran the numbers, so don't consider this set in stone, but one would be very unwise to flirt with FDIC insured limits and maybe even brave to think that the FDIC (in its cuurent funded capacity) has the upcoming situation under complete control. For those that haven't read my lengthy Asset Securitization Crisis Analysis - it is now required reading to be on this blog.

I expect this list to grow very quickly:

Failed Bank List

The FDIC is often appointed as receiver for failed banks. This page contains useful information for the customers and vendors of these banks. This includes information on the acquiring bank (if applicable), how your accounts and loans are affected, and how vendors can file claims against the receivership.

This list includes banks which have failed since October 1, 2000.

Bank Name Closing Date Updated Date
IndyMac Bank, Pasadena, CA July 11, 2008 July 11, 2008
First Integrity Bank, NA, Staples, MN May 30, 2008 May 30, 2008
ANB Financial, NA, Bentonville, AR May 9, 2008 May 9, 2008
Hume Bank, Hume, MO March 7, 2008 July 1, 2008
Douglass National Bank, Kansas City, MO January 25, 2008 June 17, 2008
Miami Valley Bank, Lakeview, OH October 4, 2007 April 28, 2008
NetBank, Alpharetta, GA September 28, 2007 April 28, 2008
Metropolitan Savings Bank, Pittsburgh, PA February 2, 2007 April 28, 2008
Bank of Ephraim, Ephraim, UT June 25, 2004 April 9, 2008
Reliance Bank, White Plains, NY March 19, 2004 April 9, 2008
Guaranty National Bank of Tallahassee, Tallahassee, FL March 12, 2004 April 28, 2008
Dollar Savings Bank, Newark, New Jersey February 14, 2004 April 9, 2008
Pulaski Savings Bank, Philadelphia, PA November 14, 2003 July 22, 2005
The First National Bank of Blanchardville, Blanchardville, WI May 9, 2003 April 28, 2008
Southern Pacific Bank, Torrance, CA February 7, 2003 April 28, 2008
The Farmers Bank of Cheneyville, Cheneyville, LA December 17, 2002 October 20, 2004
The Bank of Alamo, Alamo, TN November 8, 2002 March 18, 2005
AmTrade International Bank of Georgia, Atlanta, GA September 30, 2002 September 11, 2006
AmTrade International Bank of Georgia, Atlanta, GA
Spanish Version
September 30, 2002 September 11, 2006
Universal Federal Savings Bank, Chicago, IL June 27, 2002 April 9, 2008
Connecticut Bank of Commerce, Stamford, CT June 26, 2002 April 28, 2008
New Century Bank, Shelby Township, MI March 28, 2002 March 18, 2005
Net 1st National Bank, Boca Raton, FL March 1, 2002 April 9, 2008
NextBank, N.A., Phoenix, AZ February 7, 2002 April 28, 2008
Oakwood Deposit Bank Company, Oakwood, OH February 1, 2002 April 28, 2008
Bank of Sierra Blanca, Sierra Blanca, TX January 18, 2002 November 6, 2003
Hamilton Bank, N.A., Miami, FL
Spanish Version
January 11, 2002 April 28, 2008
Sinclair National Bank, Gravette, AR September 7, 2001 February 10, 2004
Superior Bank, FSB, Hinsdale, IL July 27, 2001 April 28, 2008
The Malta National Bank, Malta, OH May 3, 2001 November 18, 2002
First Alliance Bank & Trust Company, Manchester, NH February 2, 2001 February 18, 2003
National State Bank of Metropolis, Metropolis, IL December 14, 2000 March 17, 2005
Bank of Honolulu, Honolulu, HI October 13, 2000 March 17, 2005