Thread: FDIC warns four US banks over liquidity

FDIC warns four US banks over liquidity
By Sarah Mishkin in New York

Published: August 1 2008 23:42 | Last updated: August 1 2008 23:42

The Federal Deposit Insurance Corporation revealed on Friday that it had issued warnings to four small US banks that lacked sufficient reserves to cover potential loan losses.

The cease-and-desist orders issued in June said the four banks needed to raise more capital, expand their loss allowances and better oversee and diversify their loan portfolios. A fifth bank was cited for violating consumer protection laws.

losses on mortages and other loans have helped bring down eight US banks this year, including one small Florida institution on Friday. Last month, Indymac, a California lender with $32bn in assets, became one of the largest banks to go under in US history. It filed for Chapter 7 bankruptcy protection on Friday.

The banks receiving cease-and-desist orders in June were MetroPacific Bank in Irvine, California; Bank Haven in Haven, Kansas; Clarkston State Bank in Clarkston, Michigan; and Hastings State Bank in Hastings, Nebraska.

Non-performing loans in Clarkston State’s portfolio nearly doubled to 4.6 per cent between the close of 2007 and the end of the first quarter of 2008, according to first-quarter earnings report released in April.

Clarkston State’s chief executive, J. Grant Smith, said in a statement accompanying first quarter earnings that â€

Now let's see, we the taxpayers bail out the bandits.

Then they suffer no consequences?

Originally Posted by vmonkey56

Now let's see, we the taxpayers bail out the bandits.

Then they suffer no consequences?

I do not get it either...these people that run banks,mortgage companies and financial institutions make a lot of loans to people that they know can't pay it back,but we the tax payers have to bail out the banks etc...Some one please tell me why these people are not in jail ?

I have not even heard a slight mention of criminal activities being involved here.

whats to stop them from doing the same thing they have been?

I remember 10 years ago when I bought the house I am living in now how much my credit was scrutinized,then a few years ago a friend with terrible credit bought a nicer house then I have and it was like going to walmart,it was so easy to get the loan etc...that I was pretty much laughing to myself thinking their is no way they would give him a loan.

Imagine the shock when he was moving in lol.

One of my children was telling me that minorities have no trouble getting a loan. Actually, I was told that a percentage of loans have to go to minorities or the banks cannot lend money.

Originally Posted by Justonehero

Originally Posted by vmonkey56

Now let's see, we the taxpayers bail out the bandits.

Then they suffer no consequences?

I do not get it either...these people that run banks,mortgage companies and financial institutions make a lot of loans to people that they know can't pay it back,but we the tax payers have to bail out the banks etc...Some one please tell me why these people are not in jail ?

I have not even heard a slight mention of criminal activities being involved here.

whats to stop them from doing the same thing they have been?

I remember 10 years ago when I bought the house I am living in now how much my credit was scrutinized,then a few years ago a friend with terrible credit bought a nicer house then I have and it was like going to walmart,it was so easy to get the loan etc...that I was pretty much laughing to myself thinking their is no way they would give him a loan.

Imagine the shock when he was moving in lol.

YES YOU ARE RIGHT ON THE NAIL. THE BANKS TOOK THE RISK AND THEY SHOULD PAY THE PRICE, NOT THE TAXPAYER. LET THEM GO UNDER IF THEY CANT MAKE IT.