Economy Watch: Failed Bank Total in ’10 Nearly Equals Total in ’09
- Oct 25, 2010
October 25, 2010
By Dees Stribling, Contributing Editor
Over the weekend seven more banks were seized by the Federal Deposit Insurance Corp. Just another weekend for the busy FDIC, but 2010’s bank closures have nearly reached a milestone. Namely, this year’s number of busted banks, 139, is now almost equal to last year’s total of 140–with more than two months left to go.
Which is worse in terms of the number and size of financial institutions torpedoed, the savings and loan debacle of the late 1980s, or the real estate debacle of the late 2000s? The raw number of banks and thrifts that failed was higher two decades ago. During 1988 and 1989, some 763 went under, compared with 280 in from the beginning of 2008 to last weekend.
On the other hand, the total assets of the ’80s failures, translated in 2005 dollars, was $309 billion. The total assets of the ’08 and ’09 failures was $473 billion, with many billions more to come by the end of 2010. Then again, that total also includes the King Kong among bank failures, WaMu, which had $307 billion in assets just before in was seized by the FDIC.
Title Insurers Nervous, Take Action
Also over the weekend, The Wall Street Journal reported that Fannie Mae and Freddie Mac, who really want the foreclosure freeze to unfreeze, are trying to broker a deal between banks and title insurance companies that will have the effect of getting foreclosure sales moving again. Knocking heads together, in other words.
Only last week, Fidelity National Financial Inc.–the largest U.S. title insurer by market share–issued a memo to its employees saying that for all foreclosure sales after Nov. 1, an indemnity covering “incompetent or erroneous affidavit testimony or documentation” (i.e., the work of robo-signers) must be signed for a foreclosed property to be insured by the company.
Moreover, the title giant struck a deal last week with banking giant Bank of America in which the bank has to show that foreclosure documents follow state law and other local practices. The bank also agreeed to make good any losses the title company might suffer from bad documentation that has already been robo-signed.
Jobless Rates Down in Nearly Half the States
On Friday, the U.S. Department of Labor reported that jobless rates decreased in 23 states in September, but rose in 16. In 11 states, there was no change. The national average is 9.6 percent.
Nevada retains its unwanted title as number-one unemployed state, with an official rate of 14.4 percent in September. Michigan is still number two at 13 percent. Thirteen other states had rates above the national average, while North Dakota retained its place as most-employed state in the union at 3.7 percent.
Wall Street had a mixed day on Friday, with the Dow Jones Industrial Average ending down 14.01 points, or 0.13 percent. The S&P 500 and the Nasdaq, by contrast, gained 0.24 percent and 0.8 percent, respectively.