3 banks and 2 credit unions go down.

[dixiegrrrrl]

According to http://www.fdic.gov/bank/individual/failed/banklist.html

3 banks closed today, in Kansas, in Co., and in Ga.

According to http://money.cnn.com/2009/03/20/news/companies/credit_unions/index.htm?cnn=yes

2 Credit Unions were taken over today.

In 2008, 24 banks were closed.
In the first quarter of 2009, FDIC has closed 20.

[upi402]

1. Thanks for this

I split funds into a credit union recently and the next day learned that CU's are stressing their insurance to try and remain solvent.
Thanks to folks like you on DU for alerting us -as the media pours syrup down our throats.

Any predictions when the run on banks will begin?

[dixiegrrrrl]

2. They have begun.

"Silent bank runs" where people are electronically taking money out, via online and cash machine.

remember when Obama was talking about "stress testing" the banks?

FDIC has hired masses of people ( CPA's and etc) and sent them out all over the country to examine bank books. NPR ran a story about it a few weeks ago.

Also, go to fdic.gov and on right hand side there will be link to the failed bank list.

bankrate.com gives you a way to check the health of your bank or credit union.

[mackerel]

3. I'm surprised to hear that credit unions were closed.

[CoffeeCat]

4. Thank youu dixiegrrrrl...

This information is so important.

It's important that we know what's going on and that people discuss this.

Based on what you've said, it's obvious that the number of bank closings is accelerating.

Why exactly is this happening...because of toxic assets?

We're in a bank that has gone down to a two-star rating, but we use it only for paying bills. I think
we're done with trusting in American financial institutions, for now. Sad...but it is what it is.

[dixiegrrrrl]

9. My CPA is encouraging clients to have a stash of cash in a safe place.

Kinda shocked me that he would so openly say this to a new customer
( I had to file taxes only this time because I withdrew retirement funds)
but he was quite serious, and is very knowlegeable.
Bankrate indicates that over extension of credit to assests
is the primary reason for their low bank ratings.

[DeschutesRiver]

5. These are NOT the credit unions you or I directly put our money into - this is worse

These were "corporate" credit unions, used by our local credit unions themselves to act as clearing houses for a variety of their transactions, and as a way to pool investments for 1000's of small credit unions across the country. By the way the MSM is touting this, most people think it was just a couple of small credit unions on the street corner going bust - far from that, these were two major cogs in the wheel of the entire national credit union system. Your local credit unions do not exist without these big boys operating smoothly (at least the way the system is currently set up).

This has been an ongoing story that just keeps getting worse, ie, that the corporate credit unions made very bad investment decisions, resulting in huge losses last quarter 2008 from investing in, amongst other losers, the same mortgage backed securities that have caused trouble for everyone else. At first, I believe in January, regulators increased insurance limits out of fear, and also injectd a huge chunk of capital to keep them from flat out failing and taking the retails with them. Now it has escalated into a conservatorship because they have failed their "stress test".

A little bit more info in this article from a reporter named Mark Davis, from Kansas, where some of the action is happening: http://www.kansascity.com/382/story/1098880.html

Here was just a small blog blurb about the situation, from January: http://seekingalpha.com/article/117418-now-it-s-the-credit-unions-turn-to-be-in-trouble

If you google this, there has been a lot of commentary, but you would not find out the extent of this potential problem just from the MSM. When I saw that two credit unions had folded on the news late last night, I too at first, mistakenly assumed it was a couple of "retail" CUs.

[DeschutesRiver]

6. Here is a quicky WSJ summary

I read elsewere that U.S. Central corporate CU is the nation's largest clearinghouse.


Regulators Seize Control of Two Largest Corporate Credit Unions

* MARCH 20, 2009, 8:10 P.M. ET

By MARK MAREMONT

In the latest dramatic move by federal authorities to prop up the nation's banking system, regulators late Friday seized control of the two largest wholesale credit unions in the U.S. after finding that their losses on mortgage-related securities were even larger than previously thought.

U.S. Central Corporate Federal Credit Union and Western Corporate Federal Credit Union, which have a total $57 billion in assets, were taken into conservatorship by federal regulators. Under conservatorship, the government will continue to run the institutions.

Michael E. Fryzel, chairman of the National Credit Union Administration, the industry's federal regulator, said the seizure was necessary to maintain the integrity of the credit union system and the already-strained insurance fund that backs up deposits in thousands of retail credit unions.

The affected institutions don't serve the general public. Instead, they provide critical financing, check-clearing and other tasks for the retail institutions. These wholesale credit unions, known in industry parlance as corporate credit unions, are owned by their retail credit-union members.

U.S. Central and Western Corporate have been grappling for more than a year with large paper losses on a slew of assets, mostly mortgage-related. In January, regulators moved to prop up U.S. Central with a $1 billion infusion after it took big writedowns on some of the securities.

Mr. Fryzel said regulators moved after becoming convinced that the two institutions were underestimating the true scope of their losses. "With us in control we'd get honest numbers," he said. Mr. Fryzel said regulators plan to replace top management at both institutions.

http://online.wsj.com/article/SB123759196056600541.html

[marketcrazy1]

7. this BIG news alright

""Mr. Fryzel said regulators moved after becoming convinced that the two institutions were underestimating the true scope of their losses. "With us in control we'd get honest numbers," --- I wonder what those "honest numbers" will turn out to be?? and if the public will ever find out??

[dixiegrrrrl]

8. Much appreciated information, and I thank you.

Not good news, either.

[DeschutesRiver]

11. You're welcome - now days anytime I see bad news....

I assume that it won't take much digging around to find that there is something even worse hiding in the background awaiting discovery.

The only thing I'm sure of now is that there are lots of other shoes waiting to drop out there.

[westerebus]

10. Credit unions were not covered under TARP.

All the bailout money for the credit unions is "new" money. Surprise! Big banks, sorta big banks, money market funds, mortgage lenders new owners, bond holders of various GSEs all get bailed out. All on the TARP. The no strings attached bill.

The credit unions did not. Credit unions pay into the corporate credit union fund to finance their big brothers. When these two announced they were in trouble and fees would increase to cover the corporates short fall of required on hand capital, the local credit unions went ballistic on Congress. That increased pay out would have decreased their ability to make loans to their membership. They would have to increase fees to their members and reduce services to cover the additional cost. That membership has a lot of military and civil servants struggling to keep their heads above water.

So once again, we stood in line and waited while those who can't fail got the first slice of the pie.

[chill_wind]

12. And this isn't especially comforting if Galbraith is right

about the next phase of Geithner's plan:

"If I'm right and the mortgages are largely trash, then the Geithner plan is a Rube Goldberg device for shifting inevitable losses from the banks to the Treasury, preserving the big banks and their incumbent management in all their dysfunctional glory. The cost will be continued vast over-capacity in banking, and a consequent weakening of the remaining, smaller, better- managed banks who didn't participate in the garbage-loan frenzy."