Bank Fail Friday came and went this week without a lot of fanfare, as horrible things we’ve become inured to tend to do, after all. Jim Sinclair, however, added up the numbers in a recent newsletter:
This week’s losses were extremely serious, a fact belied by the virtual absence of press coverage. They were the largest in any single week since the failure of IndyMac Bank on July 11, 2008. IndyMac had assets of about $32 billion and deposits of $19 billion. Its failure cost the FDIC an estimated $8 billion.
The seven banks that failed this week had combined assets of about $25.8 billion and deposits of $19.6 billion. These failures cost the FDIC an estimated $7.33 billion. Prior to this week, the FDIC’s estimated losses from 57 bank failures in 2010 stood at about $8.6 billion. This week’s failures practically doubled that figure, to $15.93 billion.
He cites this AP article as his source, and goes on to mention that the assets of the banks in Puerto Rico consisted of about one-fifth of the island’s total assets. I guess we should be glad they found buyers (by agreeing to share losses), but to think that the FDIC could’ve ended up as the largest bank in Puerto Rico is a little bit intimidating. I also like to think this is the kind of thing the press should/would have had a field day with, as ONE FIFTH OF COMMONWEALTH OF PUERTO RICO’S BANKS FAIL IN WEEKEND OF FINANCIAL MELTDOWN; UPSIDE DOWN MORTGAGES PILE UP IN STREETS makes for a great headline, but no, it kind of got a shrug and yawn. I blog more of the bad stories because you all know it’s kind of my schtick, but come on, this one had potential for great drama.
Also in the FDIC department, the NYT reports today on FDIC chief Sheila Bair’s disinterest in forcing banks to spin off their derivatives business, which might be her way of saying they’ve still got their hands full with other stuff which, obviously, is not exactly stable.