Georgia, Texas Banks Shut as Foreclosures Rise
Georgia and Texas banks with 544 million dollars in deposits were shut bystate regulators, raising the failure toll to 25 for this year, asmortgage delinquencies and home foreclosures climb in a deepening U.S.recession.
Insurance Premiums
The FDIC oversees 8,384 institutions with 13.6 trillion dollars in assets, and insures deposits of as much as 250,000 dollars per depositor per bank and the same amount for retirement accounts. The agency has proposed doubling premiums charged to banks for coverage to replenish its reserves amid agency forecasts that bank failures through 2013 will cost almost 40 billion dollars.
Washington Mutual, the biggest savings and loan, sold its assets to JPMorgan Chaset. 25 after customers drained $16.7 billion in deposits in less than 2 weeks. Wachovia Corp., the sixth biggest bank, was pushed by regulators to sell itself to Wells Fargo & Co. for $11.7 billion or face collapse.
The Treasury as part of its bank rescue effort has bought preferred shares in nine banks: Wells Fargo & Co., JPMorgan, Citigroup Bank of America, Merrill Lynch, Morgan Stanley, Goldman Sachs Group, Bank of New York Mellon Corp. and State Street.
Georgia and Texas banks with $544 million in deposits were shut by state regulators, raising the failure toll to 25 for this year, as mortgage delinquencies and home foreclosures climb in a deepening U.S. recession.
Haven Trust Bank of Duluth, Georgia, was seized yesterday and sold by the Federal Deposit Insurance Corp. to BB&T Corp. of Winston-Salem, North Carolina, which will reopen four offices northeast of Atlanta as branches on Dec. 15, the FDIC said. Sanderson State Bank was shut by Texas regulators and its assets were sold to Pecos County State Bank of Fort Stockton, which will open a single southwest Texas office Dec. 15 as a branch.
The acquisitions by BB&T, the fifth-best performing stock in the KBW Bank Index this year, and Pecos County Bank were “the ‘least costly’ resolution for the FDIC’s deposit insurance fund,” the Washington-based FDIC said in a statement.
Failures
The U.S. is seeking to avert failures by using 250 billion dollars from a bank-rescue fund to boost lender capital aftertighter credit contributed to a freeze in markets. The FDIC and Officeof the Comptroller of the Currency in November allowed private- equityfirms and other investors to buy assets and deposits of failinglenders, expanding the pool of bidders.
The FDIC on Nov. 25classified 171 banks as “problem” in the third quarter, a 46 percentjump from the second quarter, and said industry earnings fell 94percent to $1.73 billion from a the prevision year. The agency doesn’tname “problem” banks.
“We’ve had profound problems in ourfinancial markets that are taking a rising toll on the real economy,”FDIC Chairman Sheila Bair said at a Washington news conference afterreleasing the report.
U.S. foreclosure filings climbed 28percent in November from a year earlier and a looming “storm” of newdefaults and job losses may force 1 million homeowners from theirproperties next year, RealtyTrac Inc. said yesterday.
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