Zero Hedge: Meet the 35 Foreign Banks That Were Bailed Out by the Fed

[Predicto]

No. I've been obsessed with economics for years, but I don't understand something as simple as the FDIC. I don't have an opinion on when the FDIC should be relevant and when it shouldn't, I've just never looked into the institution that backstops the entire global financial system. (And yes, by backstopping the American financial system it backstops the world's financial system. Or at least that's what I'm randomly writing, because, like I said, I don't understand the FDIC. Hell, I don't even know what it stands for.)

Well, then why would you say something as empty as: "Lovely. So I pay because Horizon couldn't stay in business, even though I never interacted with Horizon in any way whatsoever."

[Kilmer17]

Because all the people who are supposed to know these things were telling us that. My wife works for the FDIC. She read the internal reports. We were walking on the edge of knife in 2008.

---------- Post added December-2nd-2010 at 02:25 PM ----------

Do you even understand what the FDIC is for?

---------- Post added December-2nd-2010 at 02:28 PM ----------

You have no idea what you are talking about. Seriously. The FDIC is not closing down any banks that they don't have to. They want them to stay open if at all possible.

We didn't "give" money to anyone. We made liquidity loans. And you want the government to tell the banks what loans to make and who is creditworthy? That's not very free market of you.

Oh believe me, I'd rather have let the failures fail. But if were going to help, I want it to stay here until we're stablized, then we can help Euro banks.

[Hubbs]

Well, then why would you say something as empty as: "Lovely. So I pay because Horizon couldn't stay in business, even though I never interacted with Horizon in any way whatsoever."

Perhaps because I think the FDIC is irrelevant when it has to backstop banks by borrowing freshly-printed money from the Fed?

[Kilmer17]

I have complete intimate and total knowledge of the situation with Horizon Bank. The bank was nowhere close to failing. Please dont insult me by claiming otherwise.

[Predicto]

Perhaps because I think the FDIC is irrelevant when it has to backstop banks by borrowing freshly-printed money from the Fed?

Well then, under your logic, I guess you aren't really paying anything, are you? Why complain?

[DjTj]

No it wasnt. It was no where close to failing.

Why were they trying to sell $8-20 million in stock when the FDIC shut them down? Why did they have $22.8 million in nonperforming loans but only $5.1 million in equity capital?

http://www.heraldtribune.com/article/20100911/ARTICLE/9111038?p=1&tc=pg

The Govt is systematically shutting down small banks in favor of monsters.

You call Bank of the Ozarks a monster? It's based in Little Rock and only went public in 1997. Somehow I don't think there is a vast government conspiracy to send money to Arkansas.

http://www.bankozarks.com/about/history/default.asp

So if lending is so stringent that local guys cant get loans for their businesses, why are we giving money to banks overseas? Why not give that money to local banks HERE and let the American entrepreneur prosper?

It's not either/or. All these banks are lending to each other, and the Fed has spent way more domestically than it has abroad.

[twa]

You are right. People do cloak their racism in the guise of legitimate criticism. Not everyone who is critical, obviously, but many.

And they are being hypocritical for making these calls 2 years into his presidency while attempting to fix problems largely caused by the last sitting president. It won't stop until the culture divide between middle/southern america and the rest of the country is breached.

Aren't you doing the same thing you accuse others of?

Who controls the purse?

[Kilmer17]

Those stqatistics are simply innaccurate.

[Hubbs]

Well then, under your logic, I guess you aren't really paying anything, are you? Why complain?

If my money is devalued - and if you want to see examples of this, look at the prices of, say, corn, wheat, and soybeans over the past year - then I'm paying, and I have no say in the matter.

---------- Post added December-2nd-2010 at 03:42 PM ----------

It's not either/or. All these banks are lending to each other, and the Fed has spent way more domestically than it has abroad.

The issue is that it's spent hundreds of billions abroad. The fact that it's done even more domestically is a topic for another thread.

[Predicto]

I have complete intimate and total knowledge of the situation with Horizon Bank. The bank was nowhere close to failing. Please dont insult me by claiming otherwise.

I'm sorry Kilmer, but unless you are an executive of Horizon Bank, I don't think you have that knowledge. And if you got that word from a friend who is an executive of Horizon, I would question whether his view of the situation is objective. And if you don't think a two year wave of devaluations and defaults in Florida real estate can take down a small, 4 branch, community bank, you are being silly.

There is a reason that Horizon was unable to raise the additional capital it needed to keep operating.

[DjTj]

Those stqatistics are simply innaccurate.

They probably shouldn't have reported those numbers to the FDIC then.

[Tulane Skins Fan]

So what else is it. What would you do to make things better? What! I have my pop corn read for this one. Let me guess, cut taxes, cut spending? By the way did you see, the economy is doing a lot better. But you would never know from all these positive threads. What about the GoP holding the Fed hostage until it bends to the idea of taxing people that make 250,000 a year or more like the rest of us? Where is th thread on that?

Its a combination of stupid people + access to the internet.

[Kilmer17]

They probably shouldn't have reported those numbers to the FDIC then.

They werent.

[DjTj]

They werent.

What is this statement doing on the front page of the September 11, 2010 Sarasota Herald-Tribune?

Horizon reported $22.8 million in nonperforming loans, or 12.3 percent of its assets.

http://www.heraldtribune.com/article/20100911/ARTICLE/9111038?p=1&tc=pg

[Kilmer17]

What is this statement doing on the front page of the September 11, 2010 Sarasota Herald-Tribune?http://www.heraldtribune.com/article/20100911/ARTICLE/9111038?p=1&tc=pg

Horizon didnt report that. The FDIC calculated that and reported it.

[DjTj]

Horizon didnt report that. The FDIC calculated that and reported it.

Why are those same numbers in the 10-Q that Horizon filed with the SEC on August 20?

http://google.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=7426044-8030-116849&type=sect&TabIndex=2&companyid=56996&ppu=%252fdefault.aspx%253fcompanyid%253d56996

[Henry]

Somebody here is a lawyer.

[Predicto]

Somebody here is a lawyer.

Nah. A real lawyer would have asked "Are these numbers not the same numbers in the 10-Q that Horizon filed with the SEC on August 20?" Never give them a chance to explain "why."

Djtj just flunked cross-examination 101.

[killerbee99]

Nah. A real lawyer would have asked "Are these numbers not the same numbers in the 10-Q that Horizon filed with the SEC on August 20?" Never give them a chance to explain "why."

Djtj just flunked cross-examination 101.

I lol'd, stop badgering the witness!!!

---------- Post added December-2nd-2010 at 05:14 PM ----------

I am beginning to believe either Kilmer was misinformed or he is full of ****.....probably misinformed

[mcsluggo]

If my money is devalued - and if you want to see examples of this, look at the prices of, say, corn, wheat, and soybeans over the past year - then I'm paying, and I have no say in the matter.

what!!!?

first of all.. you are saying that your money is devaluing by looking at the prices of 3 commodity grains? why is that basket more relevent than the CPI basket or the PPI basket or the WPI basket (or any of teh other multitude of wider baskets that DON'T show inflation?)

if you ARE going to look at that commodity grains, look longer than the last 6 months or so, please, what have those prices dones since, say, 2006-2007 -- ie, what do prices look like relative to their highs during the global food crises? food prices climbed dramaticaly right before the crisis, and then crashed hard (for a large number of reasons, including the food bubble crashing, thhe global crisis, fuel prices dropping, increases in supply BECAUSE of the previous food price crisis ...... ) looking at short term prices of three ALWAYS volatile commodity prices RIGHT AFTER a trough is..well... by the kindest interpretation being purposely selective to give VERY weak support to your preconception.

[techboy]

That blame lies squarely at the feet of Congress (both Ds and Rs) who are in the pocket of the Investment Banks' lobbyists

Now who's being unfair? President Obama had a fillibuster-proof Senate and a massive majority in the house, and yet he and the Democrats did nothing (except appoint the same group of people from the same places to the same posts at Treasury/The Fed/etc.)

The fact that the Republicans opposed it too is irrelevant, because they were irrelevant.

You apparently see this as a huge failure, and if so, you need to place it squarely where it belongs. President Obama and the Democrats.

You call Bank of the Ozarks a monster? It's based in Little Rock and only went public in 1997. Somehow I don't think there is a vast government conspiracy to send money to Arkansas.

The case would be more compelling if President Clinton was still in office.

[Tulane Skins Fan]

How can you say the democrats accomplished nothing? They accomplished a lot of controversial legislation.

[techboy]

How can you say the democrats accomplished nothing? They accomplished a lot of controversial legislation.

You need to read the exchange in context. I was referring specifically to his complaint regarding the failure to re-enact (or enact) tougher regulation of the financial industry.

[Fergasun]

This thread got way off track from where it was when I last was on it.

1) I wouldn't complain about the TARP if it was actually used to purchase troubled assets. What Paulson and Geithner did was completely beyond the Constitution. That is why I am pissed.

2) I wouldn't complain about the Federal Reserve if they actually didn't go beyond what they are allowed to do statutorily. Bernanke's QE1 program was completely beyond the Constitution (there's no legal authority for the FOMC to allow purchases of non-Treasury backed MBC (ie. Fannie and Freddie). That is why I am pissed.

3) I wouldn't complain about the banks if they actually priced their assets accurately.

The whole point that was being made regarding bank assets and collateral at 10 cents on the dollar was that the banks didn't report any material impairment, yet I guess the question is "when the Fed loans to you at 10 cents on the dollar does that count as a 'mark to market' "? I guess the answer is no.

I don't have any complaint against Congress. Of 1, 2, 3 above Congress is way more transparent. Everything Congress does is out in the open. It's clear to me that Congress is beholden to the banks. It's also clear to me that this fact can no longer be hidden. The more we have the Internet and other tools, the less Congress and other political forces (ie. banks) can influence people through the media outlets. To put it another way, the more people like me who try to be informed (and others here) and figure out who to trust when it comes to economic matters (such as Karl Denninger, Yves Smith, Tyler Durden of Zerohedge, Simon Johnson of Baseline Scenario) the more we can evaluate and figure out what is going on. Of all the institutions, Congress is the most transparent and will garner the most attention. Treasury, the Federal Reserve, and the banks are the more secretive organizations, and have incentives not to be forthcoming.

Given that the banks influence the Federal Reserve and Treasury the most, I would have no problem with the banks failing. I would have no problem with them all failing in a domino like fashion. I would have no problem if the Federal Reserve stepped in for a time and took on the role of "lender of last resort". I posted a thread awhile ago with such a proposal. Essentially it would take a massive FDIC and Federal Reserve coordination, but it involves forcing the banks to hold higher capital ratios, and then finally throwing in the tower on bank bailouts and shadow bank bailouts and taking down the banks one-by-one. To have the banks teetering on the edge of liquidity is beyond the pale and dragging down our economy. This is essentially the 3rd year of the crisis.

I'm further pissed at the banks because its clear that they used their position of advantage to fool folks into thinking that bailing out the banks is just what Main Street needed. When it was actually an effort to save their million dollar salaries and bonuses and make sure they don't end up losing all their power and influence. There were ways, different ways the Fed and Treasury could've gotten us to this point in the process. I don't believe they did so in a way that was very democratic, they have acted very elitists and should be called on the carpet for it.

[Hubbs]

what!!!?

first of all.. you are saying that your money is devaluing by looking at the prices of 3 commodity grains?

I don't know if you know what the word "examples" means, but no, I'm not basing this on just three commodity prices.

why is that basket more relevent than the CPI basket or the PPI basket or the WPI basket (or any of teh other multitude of wider baskets that DON'T show inflation?)

Because those are all designed by the same people who said the crash wouldn't happen, then said they didn't know why it was happening, then said that they don't know why we haven't had a real recovery yet. In other words, morons who are good bureaucrats and who have been promoted to their positions by other morons who are also good bureaucrats.

if you ARE going to look at that commodity grains, look longer than the last 6 months or so, please, what have those prices dones since, say, 2006-2007 -- ie, what do prices look like relative to their highs during the global food crises? food prices climbed dramaticaly right before the crisis, and then crashed hard (for a large number of reasons, including the food bubble crashing, thhe global crisis, fuel prices dropping, increases in supply BECAUSE of the previous food price crisis ...... ) looking at short term prices of three ALWAYS volatile commodity prices RIGHT AFTER a trough is..well... by the kindest interpretation being purposely selective to give VERY weak support to your preconception.

Really? Food prices crashed as subprime started to collapse when there wasn't any quantitative easing? Why in the world do you think I would be surprised by this information that I already knew and have tried to explain in numerous threads over and over again, only to be hammered with so very many questions like, "Why is the CPI not a more relevant basket?"

---------- Post added December-3rd-2010 at 03:33 AM ----------

Oh, and Fergie-Ferg, I like the way you think. One question, though - why do you say that banks are "teetering on the edge of liquidity" when they have a trillion in excess reserves parked at the Fed?