After enduring extraordinary shocks in 2008, the U.S. banks entered an exceptional state of turmoil in 2009. Starting as a credit issue in the subprime segment of the mortgage market, the sticky situation spread to almost the entire financial services industry, and all corners of the globe. In other words, the financial crisis ultimately morphed into a massive economic crisis, which has had major ramifications across the whole world. Although the banking industry is dealing with liquidity and confidence challenges, it now has financial support from the U.S. government. The government has taken several steps, including programs offering capital injections and debt guarantees, to stabilize the financial system. We believe that the worst of the credit crisis is now probably behind us. After almost a year of initiating the $700 billion Troubled Asset Relief Program (TARP), a lot has improved with respect to the economic crisis, but ...

I was kind of dozing, idly dreaming of playing golf, where if I wasn’t putting the ball right into the cup from 25 feet away, then I was chipping it in from 25 yards out, wowing the crowd with deft wedge action, whereupon my caddy, a beautiful girl in a bikini and stiletto heels, would say, “Oooh! Nice one! You are so good that it gets me hot! I am panting for you, my Hot Mogambo Golfing Stud (HMGS)!”

Suddenly, I was jolted rudely awake by alarms ringing in the Mogambo Bunker Of Paranoid Delusions (MBOPD) at the news of a drop of $40 billion of Total Fed Credit last week. Wow! This is the “money” that magically appears, literally “out of thin air, as a new credit on the books of the banks, which they can then loan out some Huge Freaking Multiple (HFM) of that little bit of new

...

This post provides links to some interesting articles I have read over the past few days that you may also enjoy.

• Doug French (Ludwig von Mises Institute): Dead banks walking, 11 June, 2009. It’s widely acknowledged that hundreds if not thousands of banks are on the ropes and just waiting for regulators to wrap them in yellow tape some Friday evening. However, fewer than forty US banks have been seized this year. The Federal Deposit Insurance Corporation (FDIC) list of problem banks grew to 305 in the first quarter, the highest number since 1994, but of course the names of those banks are not released so that depositors can be forewarned.

• The Economist: Seeing red, June 10. America’s debt is Barack Obama’s biggest weakness

• Arthur Laffer (Wall Street Journal): Get ready for inflation and higher

...

Friday December 12, 2008 Navivest

With the closure of two more banks by banking regulators Friday evening, the number of banks that have failed so far this year in the U.S., now totals 25.

While that does not sound like a lot especially considering that there are over 8,500 fedrally insured banks and thrifts operating in the U.S., there were just three bank failures last year and four in 2006.

Friday evening, Texas Department of Banking closed Sanderson State Bank in Sanderson Texas and Haven Trust Bank in Duluth Georgia was shuttered by the Georgia Department of Banking and Finance.

Upon the closure, The Federal Deposit Insurance Corporation or FDIC, was appointed receiver of both banks.

The size of the banks was relatively small, with Haven Trust having assets of $572 million and deposits of $515 million as of Dec. 8, while Sanderson State had assets of $37 million and deposits of $27.9 million

...