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Discussion Starter · #1 ·
last night on the radio I heard that Houston based bank Franklin bank went under. Anybody heard anything?? Stan9999 what have you heard? Ya little ray of sunshine!!!!:p The announcer said it's the 18th bank to take a dive.
 

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Some Californian bank went down with it. There's 117 others on the FDIC's endangered list as well.

I'm not sure what this means to you and me though. While a sizable portion of the vast Ernie fortune (which would probably all fit in one grocery sack) is currently stored in a bank, I don't derive that much of my income directly from banks.
 

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http://calculatedrisk.blogspot.com/2008/11/fdic-two-more-bank-failures-numbers-18.html

As of September 30, 2008, Franklin Bank had total assets of $5.1 billion and total deposits of $3.7 billion. Prosperity Bank agreed to assume all the deposits, including the brokered deposits, for a premium of 1.7 percent. In addition to assuming all of the failed bank's deposits, Prosperity Bank will purchase approximately $850 million of assets. The FDIC will retain the remaining assets for later disposition.
...
The FDIC estimates that the cost of today's transaction to its Deposit Insurance Fund will be between $1.4 billion and $1.6 billion.
$1.4 billion estimated loss / $5.1 billion total assets = 27% loss
(1.6 billion loss would be 31%)

I believe that a "well capitalized" bank is supposed to have 8% equity or more (ie, stockholders investments is 8% of the total assets) that are wiped out before any losses to the FDIC. I don't think 8% cushion is not included in the loss percentage above. So, I think the actual loss in the portfolio would be 27% + 8% = 35%

The FDIC had about 53 Billion in its insurance fund a few months ago, *before* it paid ~10% of it in bailing out a single bank failure that was *not* on the problem bank list. (ie, the FDIC didn't realize it might fail.)

If you read about "level 3 assets", and the arguments over "mark to market accounting", and see the huge percentage losses in the banks that are going belly up, you'll get a strong suspicion that a big chunk of the banking system is probably insolvent. (not to worry tho, bonuses for wall street are safe :mad:)

--sgl
 

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Discussion Starter · #4 ·
(not to worry tho, bonuses for wall street are safe :mad:)

--sgl
oh well thank goodnes because that's the part that's be really keeping me up at night:grit: Actually I've never even heard of franklin bank. I've heard of the insurance company but not a bank.
 
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