825 small banks that closed in 1990-1992 (a record number by far)
By Daniel at 1 February, 2009, 3:55 pm
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-i.e. the Resolution Trust / Texas problem…..small banks–no large banks.
Now it is worse. Our major banks have collapsed. One major bank = thousands of smaller banks–like WaMu, Bear Sterns, Lehman, etc…and Citi and BOA near collapse.
Citigroup, Bank of America hold 25% of the country’s deposits. They are insolvent, based on the difference of the current market value of their toxic waste and what they are carrying the assets on their books. 50-55 cents versus 22 cents. That’s what the Big Bank is all about. Getting those assets off their books. The government has to pay the premium or the banks go under.
Both of these banks are already closed without TARP money. Who knows where JP Morgan and Wells are at (another 25% of deposits held). Then consider the other large regional banks that have gotten TARP money for capital.
You keep seeing these $250 million banks go under each Friday. There are many, many more like them to go. Closing a bank is a legal process. There are orders/memorandums filed. The banks hire attorneys for compliance. They are given time and finally they are closed. Expect several of these small ones to go down on a weekly basis the rest of the year.
Now add all of those banks up, many of whom would have already failed without TARP money or carrying assets at greater values than market value and then come back and give me a thesis on why this isn’t as bad as ever.
Yes we have about 30 small banks closed now—-but growing at 3 to 4 per week, and years of this should surpass the 1990 era—and with all our trillions in bailouts how could any bank fail now—and they are and have and that shows it is worse now.
Notice that the small banks are not in one area like 1990–but across the whole nation—it is not just texas–but our whole nation and world–which makes it worse–there is nobody to help–they are all broke.
In 1990-1992 the cost to bailout them all out was $425B in 2007 dollars—today we have spent trillions—10 to 20 times more and cannot make a dent.
That is because we have $92 Trillion in the USA and $516T worldwide of worthless CDO’s and credit swaps–gone bad.
You may also like to read: U.S great 2009-2010 depression is more likely now
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When you say “small banks” are you referring to regional banks or community banks?
Thanks.
Regional banks