Actually, it’s 3 failures today, but who’s counting?
By Daniel at 8 February, 2009, 7:15 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
(3rd just announced moments ago)
County Bank, Merced, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Westamerica Bank, San Rafael, California, to assume all of the deposits of County Bank.
County Bank’s 39 offices will reopen as branches of Westamerica Bank. County Bank branches that had Saturday hours will reopen tomorrow. County Bank’s remaining branches will reopen on Monday. Depositors of County Bank will automatically become depositors of Westamerica Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers of both banks should continue to use their existing branches until Westamerica Bank can fully integrate the deposit records of County Bank.
Over the weekend, depositors of County Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.
As of February 2, 2009, County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. In addition to assuming all of the failed bank’s deposits, including those from brokers, Westamerica Bank agreed to purchase all of County Bank’s assets.
The FDIC and Westamerica Bank entered into a loss-share transaction. Westamerica Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers as they will maintain a banking relationship.
People are playing a game of musical chairs thinking the FDIC will save everybody. The problems:
1. The chairs are disappearing as we play. (less money available to FDIC due to TARP, wars, more bailouts, more war etc etc)
2 The music is getting faster. (more general negative publicity)
3. More people are coming into the room to play (moving out of non FDIC insured funds)
4. The dancers are getting more jittery and running into one another. (nervousness)
5. The fee to play is increasing. (that is - interest paid on FDIC accounts is becoming negligible)
6. Termites are chomping and weakening the remaining chairs (too much funny money being printed to monetize the debt)
When the music stops the FDIC will have run out of money.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.