FDIC Weighs Tapping Treasury as Funds Run Low Short-Term Loans Might Be Needed After a Bank Failure WASHINGTON -- Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures. Ms. Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold. The last time the FDIC borrowed funds from Treasury came at the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered. That the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis.
WASHINGTON -- Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures.
Ms. Bair said the borrowing could be needed to cover short-term cash-flow pressures caused by reimbursing depositors immediately after the failure of a bank. The borrowed money would be repaid once the assets of that failed bank are sold.
The last time the FDIC borrowed funds from Treasury came at the tail end of the savings-and-loan crisis in the early 1990s after thousands of banks were shuttered. That the agency is considering the option again, after the collapse of just nine banks this year, illustrates the concern among Washington regulators about the weakness of the U.S. banking system in the wake of the credit crisis.
Dead Men Walking ... So now we have the recipe and an example for "Dead Men Walking": * Common stock too low to issue new shares. * Preferred stock yield too high to issue new shares economically. * Issuing debt is uneconomic. * More write-offs coming in days to come. * Business trends are awful. * Denial. Now that we have identified the "poster child", let's find a few more... Or sadly, more than a few. <... indicates many statistics cut...go to link> Zions Bancorp * Equity has traded down from $75 to $25. <...> KeyCorp * Common Stock has traded down from $40 to $11. <...> Fifth Third Bank * Equity has traded down from $60 to $14. <...> Washington Mutual * Equity has traded from $40 to $3. <...> National City * Equity has traded from $40 to $5. <...> Regions Financial * Equity down from $40 to $8. <...> General Motor/GMAC * Equity has traded from $80 to $10. <...> Ford/Ford Motor Credit Co * Equity has traded from $60 to $4. <...> Wachovia * Equity has traded from $60 to $14. <...> CitiGroup * Equity has traded from 60 to 9. <...> Who are in the "Limping but Not Dead Man Walking Crowd"? These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include: * Citi * Merrill Lynch * Morgan Stanley * Suntrust * Legg Mason * Capital One * AIG * MetLife * Prudential
Now that we have identified the "poster child", let's find a few more...
Or sadly, more than a few. <... indicates many statistics cut...go to link> Zions Bancorp * Equity has traded down from $75 to $25. <...> KeyCorp * Common Stock has traded down from $40 to $11. <...> Fifth Third Bank * Equity has traded down from $60 to $14. <...> Washington Mutual * Equity has traded from $40 to $3. <...> National City * Equity has traded from $40 to $5. <...> Regions Financial * Equity down from $40 to $8. <...> General Motor/GMAC * Equity has traded from $80 to $10. <...> Ford/Ford Motor Credit Co * Equity has traded from $60 to $4. <...> Wachovia * Equity has traded from $60 to $14. <...> CitiGroup * Equity has traded from 60 to 9. <...>
Who are in the "Limping but Not Dead Man Walking Crowd"?
These companies would include those that may be 'too big to fail', have enough quality assets to sell, a franchise that is worth something to an acquirer or could just be broken up into pieces. They include: * Citi * Merrill Lynch * Morgan Stanley * Suntrust * Legg Mason * Capital One * AIG * MetLife * Prudential
Frank Delaney ~ Ireland
