Home : Blogs : Matt Listro Your Credit Repair Expert : Matt's Blog

9 Banks Failed in 1 day !!!!

That's right you read the headline correctly. Nine Banks failed in one day. All 9 banks failed on Friday Oct. 30th making it the largest number of bank failures in one day in US history!

The banks that failed are:

North Houston Bank	Houston	TX
Madisonville State Bank	Madisonville	TX
Citizens National Bank	Teague	TX
Park National Bank	Chicago	IL
Pacific National Bank	San Francisco	CA
California National Bank	Los Angeles	CA
San Diego National Bank	San Diego	CA
Community Bank of Lemont	Lemont	IL
Bank USA, N.A.	Phoenix	AZ

That brings the total of bank failures for 2009 to a whopping 115. How does that total compare with previous years you ask? Well in 2008 there were 26, in 2007 there were only 3, and in 2005 & 2006 there were zero (statistics obtained from FDIC at http://www.fdic.gov/bank/individual/failed/banklist.html)

☺

Matt

Toll Free: 888-NCFIXER (623-4937)
Toll Free Fax: 888-FAX-4020 (329-4020)
Local: 860-282-6181
330 Roberts Street 4th Floor
East Hartford, CT 06108

credit repair company

Posted by Matt Listro Your Credit Repair Expert on 11/02/2009 09:25 AM

Comments (99)

Real Estate in the ActiveRain Channel

2009 bank failures

This post has been included in Connecticut Information Middlesex County, CT Information Higganum, CT Information
Post is included in group: MA REALTORS
Post is included in group: Florida Gulf Coast Realtors
Post is included in group: Dedicated Bloggers
Post is included in group: Blatant Politics
Post is included in group: Active Rain Newbies

99 Comments on 9 Banks Failed in 1 day !!!!

NOV

Not to mention CIT filing structured BK on Sunday.

Do I hear more dominoes falling? I pray these failures will end soon. What a travesty.

The positive aspect is that the government isn't trying to bail them all out. Anyone want to buy a bank?

That statistic doesn't include the number of banks bought out just because of their financial conditions. The S & L crisis was mild compared to what's going on here.

Matt - I am working with a big builder here in Austin who is experiencing pretty major delays. When we inquired as to the nature of the delays, they told us that their two primary banks had failed. Lovely.

All of the banks listed above, with the exception of Community Bank of Lemont, were owned by a single holding company, FBOP Corp., out of Oak Park, Illinois. I don't see any upside in the FDIC takeover of these banks. These banks did not engage in the practices that brought down the real estate market. They were very much the picture of responsible lending.

The irony in this is the reason these banks were shut down is that they were too heavily invested in the GSEs Fannie Mae and Freddie Mac. When those two entities were taken over by the federal government, the stock value was lost - to the tune of $800,000,000.00. So, government action led to their downfall, and the government shut them down when they were not able to recapitalize quickly enough.

Meanwhile, the government has bailed out the banks that were 'too big to fail', causing them to purchase other lenders and become even bigger. To me, that makes no sense. A better solution would have been to assist regional banks and community banks is buying pieces of the mammoth banks. That way, we would no longer have banks that are too big to fail, and we would have a stronger, regional banking system.

Matt, That sounds very ominous to me. Do you think this was just a coincidence.

Ouch. I really like what this guy Patrick above me has to say about it. Seems to make sense.

Thanks Matt, that wasn't in the news. Also interesting comments from Patrick Scott (#6). The Community Bank of Lemont is in my marketplace.

Linda Metallo, Re/max Impact, Lockport, IL.

I saw that on Market watch. Not a pretty site. How long before the FDIC needs a major bailout?

Last week's Sunday paper seem to indicate there will be more failures on the way !!!!!!!!!!!!!!!!!!!!!!!!!!

WOW!! That's incredible. Now I know why I rarely watch the news or read the papers. This stuff is depressing.

Matt,

Like Yogi Berra said, "it ain't over till its over." I don't think we've seen the end of the failures.

Rich

Wow! Thanks for the post!

I agree with Bryant- I don't watch too much of that news because it gets depressing! Trying to stay positive. :)

I think there will be more next year this stuff about the recession is over is still a surprise to everyone

Matt, That is more than 4 times that of 2008. I wonder what we can expect in 2010?

This is food for thought for those that don't understand why banks make borrowers pay back their loans.

not exactly household names.

not much of a boat rocker.

with a headline like that you could write for cnn.

Who will the pundits and the negative throngs blame this time. We've been getting deeper and deeper into this and still no end in sight. What about those huge bonuses that we all could live on in a spa-like commune for the rest of our lives.

Wow, that really makes you stop and think, doesn;t ot?

To put it in your pet's terms...Our money may not be worth kitty litter a year from now! Although,I'm sure the government has big plans to save us all !! :)

Thanks for the update. I imagine there will be several more before we're done. Keep me posted!

Wow. That's a lotta meatballs.

Wow...very informative as I was not aware that had occurred. It is still the "wait and see" attitude right now. I do not believe that the end is here yet. Thanks.

Matt,

There are more than 400 on the list still to fall. The FDIC keeps running out of money, and is playing catch up.

Mike in Tucson

Unbelievable. Maybe they can get buddy loan from B of A or ING. They posted billions in profits and may have a few bucks left over if they didn't run out and spend it all.

For the majority of the Community Banks in our Area that have failed this year... it's due to positions in Commercial Real Estate development.... which is the next big collapse on the way...

I would put money on it that the majority of the banks you listed were financing commercial real estate projects.

And the recent announcement of CIT going BK is certainly not going to help out...

Matt,

This may just be the beginning??

Is the FDIC hiring? :)

Sarah in Nashville

Patrick Scott above, thank you for chiming in. I appreciate the additional information.

I thought that the Texas banks were doing better than the rest of the country, looks like they are trying to catch up with every one else.

I saw that. This is just getting comical. We only had 26 banks fail from 2000-2004. We've had 119 so far this year. What the hell is going on?

Geez, i thought the economy was doing much better though...weird.

To respond to Jason's comment - the world gets really small and we find how many banks are really tied together when they start to have issues. Thankfully there ARE enough strong banks to pick up the slack.

I think we do need to add some perspective to this...

Here are the bank failure rates for the period of1982 - 1993

1993 - 50
1992 - 181
1991 - 271
1990 - 382
1989 - 534
1988 - 470
1987 - 262
1986 - 204
1985 - 180
1984 - 106
1983 - 99
1982 - 119

The other thing to put it in perspective would be the failure rate for 1930. There were 1352 bank failures that one year.

While 109 seems like a lot, it isn't that far from the nroms, especially considering the current economic climate.

WOA Kitty!

We live in interesting times . . .

Yeah, it's disconcerting to hear about these banks failing but as Patrick and Lane have pointed out, banks fail, and if they are one and the same with different names then it's one bank.

The years 2005, 2006, 2007 were the years the banks were pushing us over a cliff, and gilding their bathrooms with... you get it!

Lane, where do you get your stats? This really helps put things in perspective. We have a short sale and it may be on their list - I'm going to have to check it out. They were just told to 'stop doing short sales' by the Feds.

That is an incredible number for a single day. Are all of these smaller banks ? This will just make larger banks stronger. Hmmm

Stunning statistics on bank failures. Gives us an extra push to take special care of our clients!

An incredible number for a single day! More than failed during the Depression?

I believe that Cal National was purchased by US Bank, so it looks like the big banks are just getting bigger.

Matt, I was wondering how this compared to the bank failures of the Depression era, and how many failed in one day during those times. Lane?

Matt - I'm sure we are far from done, but Lane did put it in some perspective for us too.

So at what point are banks going to be in the same buildings of Exxons? Like Blimpie Subs.

Wow, it makes you wonder when this thing is ever going to turn around, thanks for the update as I missed this story in the news.

NOV

wow! this is crazy! I wonder when this is going to get better?

San Diego National Bank is where I do my business banking, and they too, were taken over by US Bank, as Christine mentioned another was, in #44.

Unfortunately, I think we'll see more of the smaller, regionals continue to go down, with the way many small businesses are hurting, and with the Commercial mortgage meltdown looming.

We all might want to do some research on the banks we use and depend on, some surprising results could turn up.

Start digging deep into your pockets everyone, lol. Ouch is right.

There's going to be many, many more bank failures Matt - Unfortunate but true. The FDIC is currently having some difficulty finding investors and/or solvent banks to take over the troubled banks and have slowed down the takeovers. Even though there are banks out there that need to be shut down.

Bank failures are part of the learning cycle (or should be). I guess in a perfect world there would be no bank failures or bankruptcies.

I do hope we are learning from our mistakes. Sometimes I wonder.

Friday's is FDIC take-over day and unfortunately, there have been many takeovers this year. A previoius poster has a good point...where's the government programs to helping these regional or community banks?

Hi Matt,

I hadn't seen this. It is pretty alarming. But beyond the number of banks, was there any information on what dollar volume they represented?

Wow, didn't see this plastered all over CNN with national "experts" being interviewed all day long. Wonder why?

Not surprising that most of them are in Texas and California. Aren't those two states with a lot of loan fraud?

Let's reiterate what was pointed out earlier...all except for one were owned by the same holding company. That means 2 "companies" failed last week. It's not as dramatic as it seems.

Why should we focus on failures? Let's look at or for businesses that are growing and thriving these days. There are plenty, but they don't make the papers as easily.

Lane has a good point, let's put it in perspective to the late 80's. Not much of a comparison, although there seems to be more of a global economic meltdown this time around which is making any recovery happen at a snails pace.

All of these comments are very interesting! Will pass on to my commercial clients.

sign of the times...Greed has caught up with the banks...

Is there any significance to the fact that they were nearly all western banks? Were these banks that had a disproportianate number of foreclosed properties?

Lane's comment put things into perspective for me. Here it is again:

I think we do need to add some perspective to this...

Here are the bank failure rates for the period of1982 - 1993

1993 - 50
1992 - 181
1991 - 271
1990 - 382
1989 - 534
1988 - 470
1987 - 262
1986 - 204
1985 - 180
1984 - 106
1983 - 99
1982 - 119

The other thing to put it in perspective would be the failure rate for 1930. There were 1352 bank failures that one year.

Thanks everyone for your input!

Matt,

We get all excited when banks fail. How many restaurants have failed this year? Dry cleaners? Other businesses? Since all funds are insured, it's not really anything to worry about. :)

Steve

yes i agree with the perspective.... however,IF we the people, do not get a handle on this and the current govt. there will be one govt and one bank here in the USA

Matt,

Thanks for keeping us up to date...

Lane (38) thanks for keeping things in perspective...

It was the worst of times and it was the best of times...

John

We've seen a lot of small community bank failures here in GA. I wonder what will happen with the FDIC?

Creepy, but not surprising..

Audit the illegal, unconstitutional and fradulent Federal Reserve. If we had honest money this crap would end. Read your Consitution and understand how money is actually supposed to be created and overseen.

Paper money has always led to abuse and we are witnessing the worst abuse in a hell of a long time.

Matt...This is alarming. I have heard that 400 maybe number. Commercial foreclosures are coming.

Jerry Gray CRB,CRS,GRI / Prudential Carolinas Realty / Winston Salem, NC

I don't like to be an alarmist, but this may just be the calm before the storm. It will be interesting to see which banks survive once all of the commercial loans go belly up. And who will prop up those "to big to fail" banks who may just have a lot of these on their books? Scary times indeed.

The bank failure rates are extremely alarming, but expected.

Don't be fooled by the historic figures of bank failures in terms of the number of failed banks. In 1930 the failed banks were small savings and loans type banks. Also, that bank failure crisis was not caused by real estate crashing, but rather crop failures, speculation and other issues. The 1988-1991 S&L meltdown was largely caused by real estate speculation, but the banks were mostly small S&L's.

In 2009 the total dollar volume of failed banks is much, much worse. The 2009 figures do not count the banks that are technically failed, but taken over by another bank before failure (think Merrill Lynch). The 2009 bank failure figures do not count the hundreds of billions of bank and financial institution bailout monies (think AIG, Bank of America, Hartford Financial, etc.). The historic bank failures were when banks had larger reserve requirements. The banks that fail today have reserves of 3% or less which means that taxpayers are eating a huge % of the losses at these banks. Also, due to the $250,000 FDIC limits the taxpayer burden is much higher. The 2009 bank failures are made worse by the fact that the average American has many, many times more debt than at any time in history. When it is all over the 2008-2012 bank failures and bank bailouts will be the worst in US history in terms of dollars spent even after adjusting for inflation.

Don't believe me. See this website, which shows a list of the TARP bailout money recipients. To date there are 727 TARP recipients with TARP commitments of $467,224,200,116 (that's over $467B). According to the FDIC website, "From 1929 to 1933, bank failures resulted in losses to depositors of about $1.3 billion. Before the FDIC was in operation, large-scale cash demands of fearful depositors often struck the fatal blow to banks that might otherwise have survived." That's $1.3B during the Great Depression in total compared to the $467B and counting that we have today. Even with inflation, you can see that the dollar value is much, much higher today. Still don't believe me, check out this website, which claims that approximately 4,000 banks have actually failed in this current financial crisis. The 100 or so figure reported is artificially low by virtue of the bailout monies and phony accounting changes that the FASB made which allowed banks to count asset values such as 2nd mortgages and HELOC's as being worth face value instead of the 5-10 cents on the dollar that they are actually worth (think short sales and junior liens wiped out in foreclosures).

No, please do not be fooled. This is very, very bad. Forget the "number" of failed banks, look at the dollar losses - they are STAGGERING and exceed anything ever experienced in US history! This financial crisis is only going to get worse. If the FDIC analyzed banks today the same way that they did in 1930, one could argue that nearly all 8,000 banks in the US have actually failed. How do I know that? Because we have an economy built on debt, not assets. Leverage amplifies profits and losses. Now that we are on the loss side and we have a country and economy with record leverage we will have the worst financial losses in US history. There is no way around this. Please show me a bank that required 20%+ down on home purchases and did not make 2nd mortgage or HELOC loans and did not issue credit cards or personal loans and I will agree that the bank is solvent.

If you take in money at 2% and lend it out at 6% or more how do you fail? Overhead is to high is the only answer.

Why didn't we start NEW BANKS instead of bailout old ones?

How is that Hope and Change working for you? I am just hoping for some change! I wish I was too big to fail.

And I still don't undertand why they take so long to process the short sales...

Amen Gene R - isn't governement lovely. Awesome work James McCormack - do a blog of your own - please.

Hi Matt, Certainly seems like we are witnessing some of the fallout associated with the banking crises. And more to come before we see the end.

Matt,

Where will it all end. In Winston Salem NC, we have some very strong banks, but a few years ago, one of our most conservative banks, Wachovia, was "Merged" .., all the people inside the bank changed but kept the "Good Name, Wachovia...a symbol of strength and conservative banking. Now, the changed bank (Wachovia) is been bought out by Wells Fargo because it was failing.... Where does it all end.

How is that this was not the leading story on every local newscast? Have we become immune to banks failing? But the most on 1 single in US History? Wow!!

I'd like to know how the 115 failures in the most recent five year period compares to the number of failures (maybe as based on a percentage of the total number of banks) during the five years from 1929 to 1934.

James (Mc Cormack) - Thanks so much for your comments and research. I will be bookmarking the sites you mentioned.

I guess we must all choose our banks wisely this days. I see there are 2 in IL my state and they are not who I use. I guess in the end we are just whittling out the weak and the strong will survive.

Lane, nice stats you added. My concern is that the banks we have left are all buying eachother to yet again become "too big to fail"...

Shelly Whitworth
www.MorSystems.om

People, people, people....get a grip!

After the crash during the first 10 months of 1930, 744 banks failed - 10 times as many. In all, 9,000 banks failed during the decade of the 30s. By 1933, depositors saw $140 billion disappear through bank failures.

...and then...

The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations

...and then....thanks to Lane Bailey....

Here are the bank failure rates for the period of1982 - 1993

1993 - 50
1992 - 181
1991 - 271
1990 - 382
1989 - 534
1988 - 470
1987 - 262
1986 - 204
1985 - 180
1984 - 106
1983 - 99
1982 - 119

The other thing to put it in perspective would be the failure rate for 1930. There were 1352 bank failures that one year.

If you are under 30 it's your first dose of reality....or did you think every home would be worth a million $$$ one day?????????

A Question my friends... (I don't get it)

Are we all so seriously concerned about the 100+ billion in subprime defaults
(http://business.timesonline.co.uk/tol/business/economics/article2106615.ece)

or the really scary next forecast coming our way?

2.4 trillion of Alt-A mortgage resets looming
(http://www.californiahousingforecast.com/in-the-news/2009/7/12/24-trillion-of-alt-a-mortgage-resets-looming.html)

and the

Option ARM
(http://www.doctorhousingbubble.com/the-truth-about-option-arms-pick-a-pay-mortgages-and-alt-a-loans-looking-at-wells-fargo-bank-of-america-and-jp-morgan-we-are-in-the-eye-of-the-469-billion-toxic-mortgage-hurricane-and-silence/)

What happened last year is almost nothing compared to the storm brewing. Why the silence?

According to a banking expert at the Canadian Apartment & Investment Conference, 2011 and 2012 are going to be VERY interesting years! I say embrace for the Perfect Storm (...remember the last wave that flipped the boat...)

This was taken from the presentation...

US mortgage resets

Lane - thanks for your input. I just wish we could go back to the old days of selling and listing houses and NOT worrying about the banks..... Dream on.....

Oh, no! Not the San Diego National Bank. Not that I know who they are, or were....

That's scary...I think it's a good idea to just leave a couple of dollars in the account and deposit our money in a jar at home.

There is an old saying that nothing is good or bad until you compare it to something else. Remember the 1920's? During the 20s, there was an average of 70 banks failing each year nationally. After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9,000 banks failed during the decade of the 30s. So 9 banks failing in one day, dosn't sound so newsworthy any more

NOV

And at least 1 of them was one of the ones we bailed out!

I think of the song sung at parties ... and many more

Just think of all the real estate that will be for sale as a result of these failures. Real estate agents should be looking to develop relationships with those entities that will get to sell the real estate assets secured by those failed banks. Now is the time to get your investors geared up to buy a lot of real estate at great discounts.

I love the comments made by Patrick Scott above. Let's not be shocked that our GOV'T continues to help out the big guy. We have been talking about the problems facing the small and mid-size business' for years and yet continue to march down the wrong path ~ Brad

Yikes, 2 in Illinois. They were rinky-dink banks but none the less they add to the statistics. Good post.

Great post Matt! And great comments. 101 closing sounds like and is a lot but certainly not compared to the figures Lane gave in his comments or even more so the 1930 figure of 1352 that Mike Luzzo reported. And I wonder percentage-wise what we are actually talking about compared to back in the 30's.

Thanks Matt,

DeeDee