FDIC Seizes 4 More Banks

The FDIC seized four more banks on Friday. That brings the total number for 2010 to 143, the most in a year since the S&L fiasco back in the 80′s. Here’s who went down:

* K Bank based in Randallstown, MD – $538.3 million in assets
* Pierce Commercial Bank based in Tacoma, WA – $221.1 million
* Western Commercial Bank in Woodhland HIlls, CA – $98.6 million
* First Vietnamese American Bank in Westminster, CA $48 million.

The assets and deposits were quickly gobbled up by other banks, with the FDIC and the acquiring bank splitting the losses on K Bank and Western Commercial Bank.

The size and scope of the banks that went down for the count this year are on average than those last year. However, the pace and number reflects how communities and local lending institutions are struggling to keep their commitments as more loans go sour. Last year 140 banks went under.

The average consumer is not at risk, as the FDIC guarantees deposits per account up to $250,000.

Pace of U.S. bank failures not seen in 2 decades [MSNBC]

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  1. obits3 says:

    I was wondering:

    What happens to your check book and account when this occurs?

    • B says:

      What happens is your account gets transferred to the acquiring bank. They’ll give you new checks and possibly a new account number. In all likelihood, though, this process will take some time, so you could be unable to access your money for a few days to a week. I recommend having a second checking account in a separate bank to use for emergency funds if your bank goes under.
      Now, your assets are protected by the FDIC, so there’s no reason to worry about losing your savings. Unless you have more than 250K in your savings account.

      • teh says:

        Maybe it’s different with small banks, but when the FDIC took over my bank (Wamu), there was absolutely no interruption. I had access to my entire account balance and could even keep using my atm/debit card as if nothing happened.

      • Dr.Wang says:

        I would recommend an emergency fund in cash stashed safely hidden at home somewhere, not in another bank.

        • NeverLetMeDown says:

          Having a couple hundred bucks stashed away at home is probably a good idea, but more in case of something like a large scale power outage, or if you lose your ATM card. Bank failure is pretty darn low on the list. Scenarios where you can’t get your money out of any bank for reasons other than technical (i.e. power failure) are scenarios where cash won’t help you much – you’ll want canned food and ammunition.

      • Gramin says:

        Disagree. There is no interruption for the customer. They will be able to access the money the very next day. Before the FDIC seizes a bank, they notify other banks in the area of the seizure. They provide general details about bank size, deposits, debts, etc. The other banks then bid on the troubled bank and it becomes their “property” as soon as the seizure is made. FDIC comes in right at close and shuts it down. The next day, it opens under new management. Absolutely NO interruption to customers. In all honesty, the FDIC is extremely effective at this process.

        • not-gonna-tell-ya says:

          True, unless there isn’t a buyer. If there is no buyer then the bank closes, and you will get a check in the mail for your covered deposits.

      • gman863 says:

        If the failed bank is taken over by a healthy bank the process requires no action on the part of customers (so long as they are not over the $250K FDIC insurance limit).

        The checking account, debit and credit card routing numbers assigned to the failed bank become additional routing numbers for the purchasing bank.

        I recently found some old unused checks almost 20 years old. Although they say “Central Bank of the South”, the routing data is identical to my new ones from BBVA Compass (what Central Bank eventually morphed into).

    • teh says:

      All of your money is completely safe and accessible as long as your account balance is under the FDIC insured limit. (The standard deposit insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.) Usually, the FDIC works with a partner bank that agrees to take over the accounts and the customers shouldn’t notice any interruption in service.

      • spamtasticus says:

        In actuality your money is not safe. What is safe is the number corresponding to how much money you have in the account available to you. What actually happens to your money and every one else’s money is that in order to “Poooff” patch the hole in the money supply created by the failing back the FED “Poooff” magically creates money by allowing the new back, through the FDIC, to add digits to your new account. The net effect is that every single US dollar currently in the money supply of the whole world becomes a little less valuable.

        Poooff!

    • YouDidWhatNow? says:

      You get cake. But then you find out that it’s a lie. Then, all you have is lies. Sweet, tasty lies.

  2. davidsco says:

    They could take Citizens, I wouldn’t care

  3. nybiker says:

    “The size and scope of the banks that went down for the count this year are on average than those last year.”
    Question: are “what” on average? Less Than or greater than last year? Equal to last year?
    I am thinking a word or two might have been dropped from Ben’s sentence.

    • eyesack is the boss of the DEFAMATION ZONE says:

      From TFA, 2009 was harsher:

      “Like these four financial institutions, the banks that have failed this year are smaller, on average, than those that succumbed in 2009. That has meant the deposit insurance fund has suffered a milder loss, which has reached about $21 billion so far this year, compared with $36 billion in 2009.”

      Does anyone know if First Vietnamese provided special services for the Vietnamese community, or is the name a historical thing at this point? If the former, it kind of sucks; whoever bought it probably won’t keep this going.

      • not-gonna-tell-ya says:

        Special services? Not sure what you mean by that since all banks are traditionally the same with the exception of some bells and whistles. They did however cater to the Vietnamese community in that their web site was available in Vietnamese and they had many employees fluent in that language…

        • eyesack is the boss of the DEFAMATION ZONE says:

          Translation services, sweet deals on money transfers/cash exchanges to Vietnam, etc.

  4. FrankReality says:

    For those of you watching banking, this is a good website,

    http://www.calculatedriskblog.com/ has reports of bank failures and a list of problem banks.

    Here’s the list of problem banks from last week – “problem” meaning the FDIC has taken some public action vs. the bank:

    http://calculatedriskimages.blogspot.com/2010/11/unofficial-problem-bank-list-nov-5-2010.html

    Most have links to the FDIC consent orders – which essentially mean “You’ve fouled up and as a result you need to do this – now!!!”)

    The site is big on reporting and light on opinion. Consumerist might want to check it out on occasion.

  5. Sheogorath says:

    The average citizen isn’t at risk for now.

    Just ten years down the line when we all bank with MonoBank.

    “MonoBank: because you don’t have a choice, bitch.”

    • jamar0303 says:

      There’s always foreign banks operating in the US that won’t want their operations gobbled up just like that. Bank of East Asia. Shinhan Bank. Union Bank/Mitsubishi-UFJ. Bank of the West/BNP Paribas. Or just off-shore it.

    • JohnnyP says:

      If Wal-Mart has it their way it would just be the bank of Wal-Mart So once they run out all other stores and banks they will just buy out the rest of the government and change the name from America to Wal-Mart thus the continent will be renamed North Wal-Mart.

  6. ZIMMER! says:

    When is BoA (Bank of America) Going down? I would jump for joy!! I like my local credit union. BoA sucks.

  7. RevRagnarok says:

    I heard about the K one at a party this weekend… M&T is taking them over. An M&T manager told me that she would be spending the week near me welcoming their “new” large corporate account customers…

  8. Griking says:

    First Vietnamese American Bank?

    • jamar0303 says:

      No matter who you are, there’s a bank that caters to your set of needs. Now whether they operate in your area is another issue entirely.

      • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

        Really? Where’s the Bank of Fat Bastards Who Spend All Their Money on Meat Munchkins? I WANT MY BANK!!!

        • mac-phisto says:

          sounds to me like dunkin donuts is your bank.

          • MaxH42 thinks RecordStoreToughGuy got a raw deal says:

            They keep taking my money, but they won’t let me make cash withdrawals. I’d complain, but they keep offering me donuts instead, and then I get….mmm, donuts….[drool]

            • Bunnies Attack! says:

              Think of it as currency exchange. You deposit cash, you withdraw donuts…. now all you need to do is convince your landlord to adopt your new currency…

  9. Max5695 says:

    I regularly keep up with the banking industry. I read a blog that details all bank closures every single week.

    With FDIC insurance all of your deposits in any FDIC member bank are insured up to $250,000. As long as another bank is found to buy the assets of the failed bank, there will be no interruption in banking service. Service will continue as normal. The bank that buys the failed bank will not make any changes to bank account number and there will be no holds or delays on withdrawing your money. It will be many months before the new bank will even attempt to convert the old accounts to the new bank’s systems. Only in that case, many months down the road, will there even be a possibility of an account number change.

    The only case where your money might be put on hold is when no buyer is found for the failed bank. In that case, your deposits will be mailed to you in the form of a check. I have reviewed bank failures for the past year, and the situation where they send you a check is very rare. Most of the time the FDIC finds a bank that will buy up the failed bank.

    To check the financial health of your bank visit bankrate.com or Bauerfinancial.com. These websites post bank ratings. The lower the star rating, the more unstable the bank. These ratings are very good at predicting whether banks are in danger of failing. Of course, if everyone pulls their money out of weak banks, the weak banks will fail even faster. FDIC insurance was created to keep people from pulling their money out of banks and causing them to collapse. Fear is the biggest danger to weak banks. When people are afraid, they pull their money out and then the bank will fail. We need to support small local banks and give them the chance to survive.

  10. human_shield says:

    So what happens if you have $300k and the small bank is bought up by a mega bank?

    • Max5695 says:

      In many cases, the bank that buys the failed bank’s assets purchases all of the assets including the deposits over $250,000. So in that case, all of your money is safe including the amount over $250,000. The press release will clearly state that all assets are safe including those over the FDIC $250,000 limit.

      Only in the case where they cannot find a buyer for a bank will anyone lose any money. The maximum amount if paid by check is only $250,000 per individual. However, there are ways to insure over $250,000. http://www.bankrate.com/finance/savings/6-ways-to-insure-excess-deposits.aspx

      • psm321 says:

        I was under the impression that if the bank has enough assets the FDIC will eventually start making good on amounts over the limit too (if they can recover them from the failed bank’s assets)

    • kmw2 says:

      You really should try not to keep more than the FDIC-insured amount in an FDIC-insured account. No one needs $300K in checking – get a brokerage account or an account at a different bank.

  11. gman863 says:

    After looking at the watch list web link FrankReality posted, I’m left with more questions than answers.

    First, it appears most of the banks who have failed (or may fail) this year are very small (under 500 million in assets). Checking the watch list, I found 10 banks in Houston and its suburbs. I’ve lived in Houston four years and have never seen one of them, leading me to guess they only have one or two locations each.

    My point is, of all the smaller banks who were closed or placed on the watch list, how many got there based on the shady dealings of one or two executives and why aren’t these executives being investigated and/or prosecuted if it can be proven they made shady deals.

    Think about Countrywide and WaMu on a much smaller scale, but with a twist:

    ShadyBank’s chief loan officer makes a deal with the developer of a large subdivision. In exchange for consideration (a bribe), the loan officer agrees to bend the rules (lie) on mortgage applications for new homes in the subdivision. These are essentially “NINJA” (No Income, No Job, No Assetts) loans. When a house sells, the developer gets his money up front and the bank is left with the risky loan.

    What makes me think this is happening (even after the recent lending crackdowns) is a list of foreclosures by subdivision recently printed in the local paper. Many newer ones had foreclosure rates of over 30%, some were as high as 70%! If the average foreclosure rate in the area is roughly 10%, this is a red flag.

    Knowing that a bank failed isn’t enough. If the FDIC has to fork over millions of bucks, the public deserves to know why a bank failed. A financial autopsy should be performed and, if fraud is found, the guilty should have their assets seized and receive advice on why bending over in the prison shower isn’t a good idea.

    • DanRydell says:

      How many people get mortgages from small, local banks?

      I think the reason a new development would have a higher foreclosure rat than the rest of the area is because all of the houses in the new development were bought around the same time – probably before the bubble burst. The area as a whole would would have mortgages spread over a longer time frame, and older mortgages would be less likely to be foreclosed.

  12. quoterageous says:

    They should take BoA. They are the worst bank ever. I would rather hide my money in the backyard than use Bank of America AKA Band of Assholes ever again.