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By Ken McElroy
When I read the recent article about which state will have the most failing banks I must say I was surprised that it was Georgia. There has been so much press on California, Arizona, Nevada and Florida -- but guess what...the number of bank failures in the Southern state is likely to rise, as only 40% of its banks are profitable. Across the country, regulators have closed 130 banks since the beginning of the year. The highest number, 24, are in Georgia, followed by 20 in Illinois, 15 in California and 12 in Florida.
The carnage isn't over yet. According to the FDIC, the number of insured institutions on its problem list, 522, which is the largest in 16 years. The FDIC reports that 50 institutions failed in the third quarter.
In September, the FDIC's Deposit Insurance Fund balance fell below zero (How do you fall below zero…Only the government!) for the first time since mid-1992. To improve the fund's position, on Nov. 12 the FDIC board agreed to require institutions to prepay three years' worth of deposit insurance premiums, about $45 billion, at the end of 2009. The FDIC said the measure would give the agency enough funds to carry on its role of resolving failed institutions in 2010 without increasing assessments on the industry's earnings and capital.
This requirement is just another cash drain on banks which could put more on the FDIC list -- so keep a close watch for 2010. If the fund balance was "out of balance" with just 130 banks -- imagine what could happen when some of the 522 banks on the FDIC list fail.
Seven U.S. banks closed by regulators; failures at 140
By John Letzing, MarketWatch
SAN FRANCISCO (MarketWatch) -- Seven U.S. banks were closed by regulators on Friday, bring the total this year to 140 as the effects of the credit crisis continued to be felt across the country.
What's more, the Federal Deposit Insurance Corp. established temporary institutions to help close two of the failed banks.
President Obama: Federal Government 'Will Go Bankrupt' if Health Care Costs Are Not Reined In
ABC's Karen Travers reports from Washington:
President Obama told ABC News’ Charles Gibson in an interview that if Congress does not pass health care legislation that will bring down costs, the federal government “will go bankrupt.”
The president laid out a dire scenario of what will happen if his health care reform effort fails.
“If we don't pass it, here's the guarantee….your premiums will go up, your employers are going to load up more costs on you,” he said. “Potentially they're going to drop your coverage, because they just can't afford an increase of 25 percent, 30 percent in terms of the costs of providing health care to employees each and every year. “
The president said that the costs of Medicare and Medicaid are on an “unsustainable” trajectory and if there is no action taken to bring them down, “the federal government will go bankrupt.”
China's Dumping Of The Dollar Has Begun
Vince Veneziani and Gus Lubin
China, once a proud holder of United States post-World War II debt, is getting scared.
For years the People's Republic has bought U.S. Treasuries, eventually becoming the largest holder of U.S. debt ($799 BILLION to be exact!). Those days are long gone, though.
During 2009, China hasn't been buying many Treasuries and has been unloading dollars in a way that makes Geithner shiver at night.
And other big U.S. debt carriers like Japan may follow suit if confidence is lost.
This presentation, courtesy of RBS, takes a deeper look into China's holdings and associated volumes since 2005. Get ready for shock and awe.