The Friday night, June 27th FDIC Financial Follies were presented again at 9:00 pm EST. That is so the public will not hear about the failures.      

          Five U.S. banks with total assets of about $1.04 billion were seized by regulators, pushing this year’s tally of failures to 45 as a recession drives up unemployment and home foreclosures.

          Community Bank of West Georgia, in Villa Rica, Georgia; Neighborhood Community Bank of Newnan, Georgia; Horizon Bank of Pine City, Minnesota; MetroPacific Bank of Irvine, California; and Mirae Bank of Los Angeles were closed yesterday by state regulators, according to statements from the Federal Deposit Insurance Corp. The FDIC was named receiver of the four banks.

          Wilshire Bancorp’s Wilshire State Bank will take over all of Mirae’s $362 million in deposits, and will purchase $449 million of assets, the FDIC said in a statement.

          Sunwest Bank of Tustin, California, acquired most of MetroPacific’s $73 million in deposits and $80 million in assets, the FDIC said. Stearns Bank of St. Cloud, Minnesota, bought Horizon Bank’s $69.4 million of deposits. Stearns will purchase $84.4 million of Horizon’s assets, the FDIC said.

          The FDIC didn’t find a buyer for Community Bank of West Georgia, and said it will mail checks to reimburse insured depositors. The bank has deposits of $182.5 million. Charter Financial Corp.’s CharterBank will assume Neighborhood Community Bank’s $191.3 million of deposits and purchased some assets in a loss-share agreement with the FDIC, according to the agency.

          “The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector,” the FDIC said. “The agreement also is expected to minimize disruptions for loan customers.”

          Regulators have seized the most U.S. banks this year since 1993. The U.S. economy has shed about 6 million jobs since the recession began in December 2007. Foreclosure filings surpassed 300,000 for the third straight month in May, according to RealtyTrac Inc.

          The U.S. banking industry said it made $9.8 billion during the first quarter trading derivatives and securities as investors started returning to the markets amid signs the recession bottomed.

          The surge was led by trading in interest-rate derivatives, which allow investors to hedge against rate swings, as the banks reported revenues that were more than triple any quarter during at least the past five years, the U.S. Treasury’s Office of the Comptroller of the Currency said today in a report.

          Revenue rose as banks, constrained by the worst financial crisis since the Great Depression, charged “wide” bid-ask spreads, or the fees that traders make from the gap between prices at which they’ll buy and sell the contracts, Deputy Comptroller Kathryn Dick said in a statement.

          Revenue from trading interest-rate contracts soared to $9.1 billion from $1.9 billion a year earlier and from a $3.4 billion loss in the fourth quarter of 2008, according to the report. Currencies contracts accounted for $2.4 billion in the 2009 first period. The banks lost $3.15 billion from trading credit.

          The Friday Night FDIC Financial Follies came on Thursday, July 3rd, due to the holiday weekend. We are told that before the year is out 400 banks will go under. There have been a number of banks that have been merged with other stronger banks, which greatly distorts this picture.

          Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.

          Twelve banks have failed this year in Illinois, the most of any state. The seven lenders seized today, with total assets of $1.49 billion and deposits of $1.34 billion, were closed by state or federal regulators and the Federal Deposit Insurance Corp. was named receiver, according to statements from the FDIC. Buyers were named for each of the closed institutions.

          The Illinois banks are affiliates of Peotone Bank & Trust Co., in Peotone, Illinois, about 45 miles (72 kilometers) south of Chicago. The failures resulted primarily because of soured loans and losses on investments in collateralized debt obligations, the FDIC said. Illinois, with an unemployment rate above the national average, was one of seven states to begin the fiscal year yesterday without a spending plan.

          “The six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution,” the FDIC said. CDOs, which packaged bonds and loans into notes of varying risk and yield, lost money as real estate defaults soared.

          Regulators this year have closed the most banks since the savings-and-loan crisis of the 1990s as lenders struggle with mounting losses on mortgages and commercial loans. The total for 2009 is more than double the 25 banks shuttered in 2008 and surpasses the 50 that were closed in 1993. The prior year there were 181 failures or government-assisted transactions.

          The House did it. They succumbed to the biggest tax increase in history for Americans. The American Clean Energy and Security Act passed by 219-212, a disgrace to our country. The worst legislation since CAFTA, NAFTA, the Income Tax and the Federal Reserve Act. Trillions more in taxes and millions of job losses. A 1,200 page piece of legislation that not one Congressman or woman read. If allowed to be passed in the Senate it will be the greatest economic threat to Americans in history.

          Costs to American will be 20% of disposable income. An increase in gasoline tax of $0.77 a gallon and a doubling of every electric bill in the country. The taxes go to government past of which will go to fund the UN and IMF.

          This bill has to be stopped in the Senate. Hit every Senator with emails, phone calls, Fax’s and letters. Short and sweet – do not vote yes on any legislation to limit greenhouse-gas emissions, such as the American Clear Energy & Security Act.

          America’s biggest oil companies will probably cope with U.S. carbon legislation by closing fuel plants, cutting capital spending and increasing imports. Under the Waxman-Markey climate bill that may be voted on today by the U.S. House, refiners would have to buy allowances for carbon dioxide spewed from their plants and from vehicles when motorists burn their fuel. Imports would need permits only for the latter, which ConocoPhillips Chief Executive Officer Jim Mulva said would create a competitive imbalance.

          “It will lead to the opportunity for foreign sources to bring in transportation fuels at a lower cost, which will have an adverse impact to our industry, potential shutdown of refineries and investment and, ultimately, employment,” Mulva said in a June 16 interview in Detroit. Houston-based ConocoPhillips has the second-largest U.S. refining capacity.

          The same amount of gasoline that would have $1 in carbon costs imposed if it were domestic would have 10 cents less added if it were imported, according to energy consulting firm Wood Mackenzie in Houston. Contrary to President Barack Obama’s goal of reducing dependence on overseas energy suppliers, the bill would incent U.S. refiners to import more fuel, said Clayton Mahaffey, an analyst at RedChip Cos. in Maitland, Florida.

          “They’ll be searching the globe for refined products that don’t carry the same level of carbon costs,” said Mahaffey, a former Exxon Corp. refinery manager.

Prices Seen Rising

          The equivalent of one in six U.S. refineries probably would close by 2020 as the cost of carbon allowances erases profits, according to the American Petroleum Institute, a Washington trade group known as API. Carbon permits would add 77 cents a gallon to the price of gasoline, said Russell Jones, the API’s senior economic adviser.

House Passes Climate-Change Plan, an Obama Priority (Update2)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPwZANlDq4R0

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After having written so long about the Fed nothing should rally surprise you. The Fed, under attack by Ron Paul’s HR-1207, came out with a strong offense for a defendable defense. Being granted more financial dictatorial power it is the antithesis of what America needs. In essence America is being handed a financial dictatorship. This will make the fed even more unaccountable then it already is. We will be faced with across the board problems and more secrecy from this privately owned bank. Continue to bombard the House members on HR 1207 and Senate members on S. 604, sponsored by Senators Sanders and DeMint.

It is proposed that the Fed will be the systemic risk regulator and supervisor of the too big to fail institutions, which own the Fed. We call that incestuous. The Fed will supply liquidity to save its shareholders. A council of regulators will be created to replace the President’s Working Group on Financial markets. That group would be chaired by the Treasury, but with advisory powers only. That means the power to manipulate all markets without interference will solely be left to the Fed.  They would be able to make any market in the world what they want it to be. There are no free markets now. The Fed would have full fascistic control. This would give the Fed’s owners the opportunity to totally loot the system and the American public.

For almost 20 years the Fed has advocated no regulation of derivatives, now they are to regulate them. That would include writers maintaining at least 5% interest in the derivatives.

The Fed would create a Consumer Financial Protection Agency with rules against predatory lending and transparency standards at the retail level. This is a farce in as much as the major banks own the Fed.

A new resolution mechanism that would clear big bank balance sheets of all toxic waste throughout the financial system, that you as taxpayers, would get to pay for.

The Fed would be the leader in the formation of global financial regulation and supervision, as part of a plan for the consolidation of all such enforcement on the path to world government. The Fed would marry into the new European Systemic Risk Council comprised of EU central bank governors. This Council would breach US sovereignty by issuing warnings and recommendations, somewhat like the Bank for International Settlements does. The Fed would work in conjunction with the EU, but at this time not be controlled by an international body. This is the foot in the door approach. Once set up the Fed would become part of this international cross border agency. From the very beginning there would be a single rulebook applicable to all financial institutions, which belies the fact that the agency would in reality control all financial institutions from its inception.

The President’s plan requires all advisers to hedge funds and other pools of capital, including private equity funds, and venture capital funds, at some fixed level, to register with the SEC.

Financial derivatives will be regulated. Standardized credit default swaps and other OTC derivates will be required to clear through a central counterparty and trade on exchanges and other transparent trading venues. The custom products will have to register as well.

The Ron Paul, Federal Reserve Transparency Act of 2009 now has 244 co-sponsors. A very upset Fed three weeks ago herded former Enron lobbyist Linda Robertson to payoff and pressure House members. Now the Securities Industry and Financial Markets Association has been brought into the fray to counter the populist backlash against bankers. The spearhead will be led by two former aides to former Treasury Secretary Henry Paulson. The plan is to target every representative in the House and unleash a multi-million dollar media blitz in city by city. A massive propaganda campaign has begun. Former treasury aides Michele Davis, a PR type and Jim Wilkinson, a former chief of staff are leading the charge. Engaged as well is Democratic polling company, Brilliant Comers Research & strategies.

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-- Posted Monday, 6 July 2009 | Digg This Article