130 banks shut down by recession and mountains of bad debt

[keep_it_real]

Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.

http://www.huffingtonpost.com/2009/12/05/fdic-shuts-down-amtrust-b_n_381108.html

[FarCenter]

1. They are mostly savings banks that have failed -- the Office of Thrift Supervision needs reform

Most of the failed banks are savings banks (formerly known as savings and loans) which are supervised by the toothless and ineffective Office of Thrift Supervision.

They are mostly not commercial banks supervised by the Offic of the Comptroller of the Currency -- what one would ordinarlily thing of as a bank instead of a savings and loan.

Unfortuantely, I haven't heard much about reforming the Office of Thrift Supervision.

The Federal Reserve has no responsibility for safety and soundness of the savings banks as far as I know.

[Snarkoleptic]

2. How's your bank doing? Check here...

http://nuscho.com/

The Texas ratio is a measure of a bank's credit troubles. Developed by Gerard Cassidy and others at RBC Capital Markets, it is calculated by dividing the value of the lender's non-performing assets (Non performing loans + Real Estate Owned) by the sum of its tangible common equity capital and loan loss reserves.

In analyzing Texas banks during the early 1980s recession, Cassidy noted that banks tended to fail when this ratio reached 1:1, or 100%. He noted a similar pattern among New England banks during the recession of the early 1990s.