Aerosmith - Livin' On The Edge
Madrid, Spain, 1994
It's a Wonderful Life - A Run on the Bank
Integrity Bank of Alpharetta, Georgia, was closed by U.S. regulators today, the 10th bank to collapse this year amid a surge in soured real-estate loans stemming from the worst housing slump since the Great Depression. Integrity Bank, with $1.1 billion in assets and $974 million in deposits, was shuttered by the Georgia Department of Banking and Finance and the Federal Deposit Insurance Corp.I am totally not surprised at this, and I also predict that you will see some additional bank failures before this is all done, plus maybe another large brokerage house may have to be supported as well. Here's why.
Regions Financial Corp., Alabama's biggest bank, will assume all deposits from Integrity, which was run by Integrity Bancshares Inc. The failed bank's five offices will open on Sept. 2 as branches of Regions, the FDIC said.
It all boils down to how long it takes to identify that a loan has gone bad. In most cases, a loan goes on what is called the "Non-Performing List" only after it is more than 90 days delinquent in making interest payments. That means you could make your August interest payment, then walk away from the loan and it would not go on the list until about December 1st. That is why there is such a slow motion effect to this shake out in the banking arena. And some banks have been known to make second loans to problem borrowers, for the express purpose of making interest payments on the first loan, to keep the first loan off the list for a while and buy some time. It takes a while for internal controls to spot situations like that in most banks.
Between now and December we should learn a whole lot more about what loans are good and which ones are bad. But expect to hear more bad news between now and then.
~ 3 WOOD
Iggy Pop - Livin' on the Edge of the Night