Am I the only one who has noticed the relationship between FDIC bank closings being mostly regional, community banks, and credit unions?
The latest being a large community bank from Austin, TX Guaranty Bank, Colonial state chartered bank from Alabama, and Community Bank of Nevada, along with other local Nevada banks and credit unions.
Doing a bit of research, I found this Boston Business Journal report from March of this year stating that the FDIC slapped East Bridgewater Savings, a bank having NO bad loans, with a rare “needs to improve” rating after evaluating the community bank under the Community Reinvestment Act, saying they "were not lending enough". In essence, punishing them for smart and cautious lending practices.
So, by using heavy handed tactics, it appears as though the the FDIC is forcing these smaller banks and credit unions into risky practices in order to drive them out of business, while at the same time the major banking industry players tighten their own purse strings.
Looking over the FDIC failed bank list, it's hard to overlook the fact that this looks to be nothing more than a systematic takeover of small banking (Savings and loan, State, Community, credit union, etc.) by the major international banking industry using the power of the FDIC.
The regulators are nothing more than industry foxes guarding the henhouse.
Elaine Nichols is a Home Educator, Activist, Organizer, Political Consultant, Political Advisor, Publicist and Researcher. Her blog can be found at http://thewhiteroseresistance.blogspot.com/
Guaranty Bank, a deeply troubled Texas lender, was sold on Friday toBanco Bilbao Vizcaya Argentaria of Spain in one of the largest government-assisted deals offered to a foreign firm.
Federal regulators seized Guaranty Bank and simultaneously brokered the sale of its branches as well as most of the deposits and assets to BBVA Compass, the Spanish bank’s American subsidiary. The government, however, agreed to absorb most of the losses on $9.7 billion, or more than 80 percent, of the Guaranty assets included in the deal.
The failure is the fourth-largest since the financial crisis began, and the Federal Deposit Insurance Corporationprojects that it will cost its deposit insurance fund about $3 billion.
Regulators also arranged for the sales of three smaller banks in Alabama and Georgia on Friday, bringing the total number of bank failures so far this year to 81. That compares with only 25 bank failures in all of 2008.
News that BBVA had submitted the winning bid leaked out earlier this week, but regulators waited until late Friday to orchestrate the takeover. That may be another sign that confidence in the financial system is being restored, since in contrast to past leaks, regulators did not immediately seize the bank over fears of rumors stoking a bank run.
Stockholders in Guaranty Bank will be wiped out, but the deal ensures that its depositors will not suffer losses. Although BBVA did not take control of the failed bank’s $344 million of brokered deposits, the F.D.I.C. said that it would reimburse brokers directly for those funds.
The government also agreed to shoulder the bulk of the losses on all of Guaranty’s loans — a deal sweetener that the government has rarely extended to overseas buyers.
BBVA agreed to buy $12 billion of the $13 billion assets left at Guaranty Bank, which it will ultimately sell to private investors. The F.D.I.C. agreed to take on the remaining $1 billion of assets, as well as cover losses on the $9.7 billion pool of risky loans that BBVA bought. The agreement calls for the government to take on about 80 percent of the first $2.3 billion of losses, and 95 percent of the losses above that threshold.
Loss-sharing agreements have become a standard part of the F.D.I.C.’s toolkit for resolving troubled banks, but rarely have they covered such a big portion of a failed bank’s assets.
And seldom are they offered to foreign buyers. Indeed, it appears the last time that an overseas bank received federal assistance in a failed bank deal was when the Bank of Ireland scooped up four New Hampshire banks in September 1991.
Analysts say the BBVA deal may signal that the F.D.I.C. will be more open to bids from foreign banks. Many of the strongest American banks are occupied with deals they did last fall, while private equity firms have struggled to meet the high bar set by regulators. Weaker banks, meanwhile, have been hamstrung by their own losses. That has left regulators scrambling to drum up buyers.
José Maria Garcia Meyer, the head of BBVA’s American operations, said in a statement that the deal provided convincing evidence of the bank’s strength and stability during the current crisis. “This transaction further demonstrates BBVA’s clear commitment in building its U.S. franchise,” he added.
Along with its Spanish rival Banco Santander, BBVA has been ramping up its business in fast-growing American markets that have strong ties to Latin America. It made a series of expensive acquisitions in Texas over the last few years.
Guaranty, which is based in Austin, will add another 103 locations in Texas and 59 branches in California, where BBVA has been trying to establish a beachhead. That will give it a total of 767 locations in seven Sun Belt states and make it the nation’s 15th-largest commercial bank with about $49 billion in deposits.
In 2005, BBVA Group acquired Laredo National Bank, based in Laredo, Texas. In 2006, it acquired Texas Regional Bancshares of McAllen, Texas, and State National Bancshares to become the fourth biggest bank of Texas after Wells Fargo, Bank of America and JPMorgan Chase.