FDIC Troubled Bank List: But Which Banks? on 100 Mortgages

The Federal Deposit Insurance Corp (FDIC) announced that the number of troubled banks on the FDIC watch list in the third quarter surged almost 50 percent and they now have 171 problem banks.

Highlighting the problems are worsening among the financial institutions controlling US deposits
The FDIC problem list current tally is the highest since the end of 1995, jumping from 117 in the second quarter to 171 in the third. However this is around 2 percent of FDIC-insured institutions that stands at 8,500.

The total assets from problem banks have risen from $78.3 billion to $115.6 billion, so from this information we can tell that the top 20 banks are not on the FDIC troubled bank list.

The FDIC have not made the troubled banks public, however it is still possible for banks that are not on the list to fail, IndyMac Bankcorp and Washington Mutual Inc both failed and were not on the list.

Source: GoogleAP

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Please tell Sheila Bair, Secretary Paulson, President Bush, and President-elect Obama that in order to improve trust and confidence in banks, the economy, and the government, the government and the FDIC, i.e. Sheila Bair, needs to gain the trust of the individual depositor.

Keeping secret the list of troubled banks does absolutely nothing in developing trust in our banking system. The FDIC comes across as a tool of the banks. There are two (2) absolute requirements to start improving the depositor’s trust

1. Restore the money lost by any depositor of the banks that failed this year.

2. Eliminate the cap on FDIC insured accounts. Follow Germany’s lead and have no cap on deposits.

3. Publish the list of troubled banks.

What angers me is that individual depositors can lose money yet our government gives billions of dollars to the big banks that made horrendous mistakes. Banks made mistakes and received money from our government yet when individual depositors made mistakes by having more than an arbitrary cap of $100,000 or $250,000 lost money. Oh, the FDIC and the government preach trust and confidence, but they radiate arrogance and distaste for the individual depositor, in my opinion.

If I were a depositor, I would take all my money out of the bank. We don’t know who is weak, so go take all your money out of your bank. The last one standing is a
‘Good” bank.

If the FDIC and government were smart, they would guarantee all deposits and publish the name of troubled banks. This shows concern, caring, openness and honesty. There won’t be a run on the banks if all the deposits are guaranteed.

By a strange quirk, if you have an FDIC insured account that doesn’t pay interest and it is over the $250,000 limit, it seems you are protected if I read it right. This, I assume, protects business deposits, but not the individual depositor. The depositor who gets a smidgeon of interest risks his or her deposit. To me, it still sounds like “let’s screw the depositors that have to audacity to get a pittance of interest.”

Here’s another thought: “too big to fail” is getting old. The FDIC (i.e., our government) routinely lets small banks fail. Twenty-two banks failed for year and the big ones, like WaMu were given preferential treatment. Three banks failed last Friday, again with no advance notice to depositors. This is not how you build trust.

I don’t have trust. I have anger. I don’t have confidence. I have a sheer repulsion for the hypocrites that preach trust and confidence yet crap on the individual depositor.

Lee Ellak
San Jose, CA

Comment by Lee Ellak — November 27, 2008 @ 10:32 pm