Make Poor Business Decision? Get a Bailout

Detective Krum

I read a question regarding the bank bailouts and thought it appropriate to use this opportunity as a teaching experience. The question is, “If the bank bailouts did not go through, who would have taken on the bad debt?”

When banks make loans to business (say auto dealers – they pay floor plan charges on each auto on their lot) If the car company went bankrupt, the bank would get pennies on the dollar in bankruptcy court. Same with banks making bad mortgage loans:
1. The bank knew better & did it anyway
2. The bank forecloses on the loan and if the homeowner filed bankruptcy, the bank gets pennies on the dollar
3. If the banks had too many bad loans, it shows the bank has poor business experience and they would file bankruptcy. Those they sold those “toxic” assets to would get pennies on the dollar.

Would you buy anything “toxic”? What does that say about your intelligence verses the bank’s intelligence?

S and T Bank May Be In Trouble

Detective Krum

S & T Bank, based in Indiana, Pennsylvania has been downgraded by analysts and recommended a sell according to Bloomberg. S & T Bank rating is a ( D+ ) but it appears analysts see the need to sell and watch this blog to see if the bank indeed, fails.  Consider SunTrust Bank, their rating is a ( D- ) considering SunTrust Bank received about $2.2 billion.Ten major bank holding companies received bank bailouts

Among the 10 bank holding companies, Bank of America Corp. was judged in May to need $33.9 billion in additional capital under regulators’ criteria, the largest gap. Wells Fargo & Co.’s shortfall was $13.7 billion, while Citigroup Inc.’s was $5.5 billion. The Fed told banks in May to shore up reserve capital by early this month. The Federal Reserve Bank index is here.

Fifth Third Bancorp’s capital need was $1.1 billion, KeyCorp’s was $1.8 billion, PNC Financial Services Group Inc.’s was $600 million, Regions Financial Corp.’s was $2.5 billion and SunTrust Banks Inc.’s was $2.2 billion. GMAC LLC needed $11.5 billion, while Morgan Stanley’s assessment was $1.8 billion.

The bank holding companies appeared to tighten lending policies instead of lending more to help stop foreclosures. In addition, bank holding companies upped interest rates to consumers while the bank was getting the money near zero percent interest from the fed and the banks cut credit limits.  The banks claim they have paid back the bailout money. How have banks paid back taxpayers? Banks claim they have dropped their interest rates and loosened credit. Have you looked at your credit card changes? Higher interest rates and cut limits don’t show the banks claims.

What can you do to voice your displeasure with bank mismanagement? Let’s learn from the auto bailout. Customers stopped buying GM and Chrysler and Ford was rewarded for not taking bailout money with increased sales.  Looking for a bank that did not participate in the bank bailouts is an avenue many are taking.

Why Bank Bailouts Cannot Work

Detective Krum

Many readers asked why the bank bailouts do not work, simple, they can’t. The bank bailouts or TARP was put into motion, as Congress said, to stimulate lending by banks to customers.  When President Bush started the bank bailouts and President Obama continued and expanded them to include auto companies, AIG, and now trying to take over health care shows elected officials out of control while we have taxation without representation.  When Congress is cowardly to stand up for freedom and our Constitution we see the need for Americans to downsize a bloated centralized power structure that does as they please.

The reason the bank bailouts cannot work is simple. Let’s suppose you are a bank and a customer comes to you for a loan, you have risk in lending to the person or company. As a bank, you notice the federal reserve is keeping interest rates near zero. Would you rather lend with risk to a customer or business or borrow money from the federal reserve (central bank) at zero percent interest and invest your loan hedging the stock market where you can make millions for yourself and others?  Banks have chosen the latter – don’t loan too much but use the TARP money to drive up the stock market as you (bank)  make a fortune. How do the banks look at customers then? As you can see, they cut credit limits on credit cards and up their interest into the 20% interest plus range.  Is that fair and the right thing to do?

Banks will say they have paid the TARP funds back – where’s my dividend check? Where did the banks get the money to pay the TARP funds back? From new lending? Or investing taxpayer dollars into the stock market creating another bubble. If you think this sounds off – then you will enjoy the new book The Dollar Meltdown. Charles explains in plain English what is going on and in an interview, Charles thinks it is too late to stop the downward spiral but shows you how to prepare to protect your assets and family.

Four things you’ll learn from The Dollar Meltdown:

WHERE WE ARE TODAY

You’ll get the whole story on America’s debt, both visible and hidden. You’ll learn how bailout bills and stimulus spending have dug us in an even deeper hole and what it means for the future.

HOW WE GOT INTO THIS MESS

You’ll learn to see old familiar patterns in some of the newest economic developments. This will help you judge the future by the past. The Dollar Meltdown lays out the real fundamentals about money and shows you exactly how the monetary system in the United States today has been corrupted so that you can avoid being victimized by it.

WHAT HAPPENS NEXT

You’ll discover how the dollar meltdown happens, the most likely scenarios, and the role of foreign creditors like China. You’ll be prepared as the authorities react to economic problems of their own making, lurching from one “solution” to the next, deepening the crisis with their every move.  The dollar meltdown will change America and you’ll want to be ready for it when it comes.

WHAT YOU NEED TO DO

There is opportunity in every crisis and there are ways protect yourself and your family and to profit in the turbulent times ahead.

You see why the old rules don’t work anymore and you’ll get easy-to-understand investment advice for the new rules, specific investment recommendations that you can put to use right away to protect yourself and your family from the dollar meltdown.

Don’t wait until it’s too late! Order your copy of THE DOLLAR MELTDOWN HERE – Do it TODAY!

About Charles Goyette

Charles Goyette has long been known in Phoenix as “America’s Most Independent Talk Show Host!” With years of hands-on experience as an investment professional, he brings a welcome dimension of foresight and clarity to his political and economic commentary.  Goyette has been called on often to share his views with television audiences nationally on CNN, Fox News, MSNBC, and PBS, including on “The O’Reilly Factor,” the popular PBS program “NOW with Bill Moyers,” and as a frequent guest on “Lou Dobbs Tonight” on CNN, repeatedly warning before the current economic turmoil of the “economic calamity the Republicans and Democrats” were creating.

 

 

 

Alarion Bank Spoof

Detective Krum

There is an Alarion Bank spoof going on and our readers need to be warned of this spoof.  You may receive an email stating the following:

“Dear Alarion Bank Customer,

As part of our security measures, we regularly screen activity in the system.
We recently contacted you after noticing an issue on your account.
We requested information from you for the following reason:

- We have observed activity in this account that is unusual or potentially high risk.

Please download the form attached to this email and open it in a web browser.
Once opened, you will be provided with steps to restore your account access.
We appreciate your understanding as we work to ensure account safety.

Sincerely,

©2009 Alarion Bank. All rights reserved.”

Included in this email is a file for you to download the “form”. I suggest if you receive one of these emails you should contact Alarion Bank at   1.888.900.9785 and inform them of the email. There is a high probability, the “form” the email wants you to download will hijack your computer and could infect your computer with a virus, rootkit or key logger. Alarion Bank is aware of the problem and has issued a Fraud Alert, see below:

Fraud Alert
Alarion Bank has received reports of a fraudulent “phishing” scam involving fake e-mail messages delivered on or about 11/06/2009 that appear to come from Alarion Bank, often with the subject line “Official Notification” or “Notification ID.” DO NOT RESPOND TO OR CLICK ANY LINKS IN THESE MESSAGES. Simply delete them.

 

One other point – Alarion Bank is located in Ocala, Florida and has a (D+) bank rating.

Add 10 More Banks to Failed List in October

Detective Krum

Ten more banks were closed on Friday October 30, 2009.

October 2009 saw 20 banks fail. That makes the total failed banks for 2009 – 116.  Consider, 27 banks failed from the year 2000 through 2007  making an average of 3.9 bank failures per year. When TARP was passed by Congress and arm twisting began in Congress to pass massive bank bailout money to selected banks, bank failures skyrocketed in 2008 and 2009.

Was the bank bailout money designed to squeeze out smaller banks by bailing out  bigger banks whose CEO just happened to be politically connected?  Large bank stock is inching upwards and profits to upper-management through bonuses is becoming a trend. Consider 26 banks failed in 2008 and now 116 in 2009. Makes you wonder if the large banks were allowed to fail, maybe the smaller banks would not have failed, doesn’t it?

Add the following banks to the list of bank failures for 2009:

North Houston Bank	Houston	TX
Madisonville State Bank	Madisonville	TX
Citizens National Bank	Teague	TX
Park National Bank	Chicago	IL
Pacific National Bank	San Francisco	CA
California National Bank	Los Angeles	CA
San Diego National Bank	San Diego	CA
Community Bank of Lemont	Lemont	IL
Bank USA, N.A.	Phoenix	AZ
First DuPage Bank	Westmont	IL

If you have investment products, in a bank, your investments are not insured by FDIC according to FDIC.  As usual, FDIC waits until Friday to close ten more banks.  One might ask, in whose best interest is it to wait until late on a Friday to close a bank?

6 More Bank Failures – 3 in Florida

Detective Krum

Total bank failures so far for 2009? 106  Three of the latest bank failures – Florida.  Partners Bank located in Naples, Florida  Hillcrest Bank, also in Naples, Florida and Flagship National Bank of Sarasota, Florida.  Minnesota and Wisconsin felt the bank failure sting as well. Riverview Community Bank located in Otsego, Minnesota and Bank of Elmwood in Racine, Wisconsin failed.

The bank failure list continues to grow in spite of Congress’ claim of saving banks through bailouts.  One might ask, ‘What banks did the American taxpayer bailout?  Is there a connection between the banks bailed out and Congress representatives? ‘  106 bank failures in ten months – AFTER – bank bailouts leads our readers to ask – What was the purpose of the bailout money?

Here is a copy of the press release.

First Federal Bank of Florida, Lake City, Florida, Assumes All of the Deposits of Flagship National Bank, Bradenton, Florida

FOR IMMEDIATE RELEASE October 23, 2009

Flagship National Bank, Bradenton, Florida, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Federal Bank of Florida, Lake City, Florida, to assume all of the deposits of Flagship National Bank.

The four branches of Flagship National Bank will reopen on Monday as branches of First Federal Bank of Florida. Depositors of Flagship National Bank will automatically become depositors of First Federal Bank of Florida. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from First Federal Bank of Florida that it has completed systems changes to allow other First Federal Bank of Florida branches to process their accounts as well.

This evening and over the weekend, depositors of Flagship National Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of August 31, 2009, Flagship National Bank had total assets of $190 million and total deposits of approximately $175 million. First Federal Bank of Florida did not pay the FDIC a premium for the deposits of Flagship National Bank. In addition to assuming all of the deposits of the failed bank, First Federal Bank of Florida agreed to purchase essentially all of the assets.

San Joaquin Bank, Bakersfield, CA Fails 99th Bank Failure This Year

Detective Krum

San Joaquin Bank in Bakersfield, California failed October 16th and makes the 99th bank failure in 2009.  FDIC, in need of its own bailout, posted the following information:

San Joaquin Bank, Bakersfield, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. FDIC entered into a purchase and assumption agreement with Citizens Business Bank, Ontario, California, to assume all of the deposits of San Joaquin Bank.

The five branches of San Joaquin Bank will reopen on Monday as branches of Citizens Business Bank. Depositors of San Joaquin Bank will automatically become depositors of Citizens Business Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branch until they receive notice from Citizens Business Bank that it has completed systems changes to allow other Citizens Business Bank branches to process their accounts as well.

This evening and over the weekend, depositors of San Joaquin Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of September 29, 2009, San Joaquin Bank had total assets of $775 million and total deposits of approximately $631 million. Citizens Business Bank did not pay the FDIC a premium for the deposits of San Joaquin Bank. In addition to assuming all of the deposits of the failed bank, Citizens Business Bank agreed to purchase essentially all of the assets.

The FDIC and Citizens Business Bank entered into a loss-share transaction on approximately $683 million of San Joaquin Bank’s assets. Citizens Business Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-share arrangement is projected to maximize returns on the assets covered by keeping them in the private sector.