Something to keep your eye on:
Even though financial stocks have rallied nearly 70 percent since the end of March, the Federal Deposit Insurance Corporation issued another grim quarterly report Thursday on the health of the nation’s banks.
The agency reported that the banking industry lost $3.7 billion in the second quarter amid a surge in bad loans made to home builders, commercial real estate developers and small and midsize businesses. Its deposit insurance fund dropped 20 percent, to $10.4 billion, its lowest level in nearly 16 years. And the number of “problem banks” increased to 416, from 305 in the first quarter, and is expected to remain high.
Indeed, federal officials warned that while the economy and financial markets were showing signs of improvement, the banking sector was unlikely to rebound soon.
“These credit problems will at least outlast the recession by a couple of quarters,” said Sheila C. Bair, the F.D.I.C. chairwoman. “Cleaning up balance sheets is a painful process that does take time, but it is absolutely necessary to the industry’s sustained profitability.
When do you all expect the CRE crash to hit?
It’s already happening.
Look at the NAREIT and NCREIF indices. They are purty bad.
Something else to keep your eye on:
Well, I see we’re back to blockquote fail.
CRE is already getting hammered, the only question is when does it hit bottom.
You’re doing a heckuva job, Timmy.
I don’t think there will be a CRE “crash” per se. We’re not going to have a sudden and steep decline in CRE valuations, repos, etc.
Rather, we’re going to see more of what we’re already seeing- a steady, continuous flow of bankruptcies and declining values. I expect it to last for another 1.5 to 2 years before the banks and property managers finally capitulate and rationalize their investments.
As long as the Fed is supplying infinite secret money to the banks, I don’t see the banks doing any panic selling.
Meanwhile, Canadian banks have just reported record profits. The Royal Bank has made back 90% of what it lost over the past year.
It would be nice to see my chequing account user fees drop a bit. I’d also like to see out economy weather any true shitstorm developing down south, but that’s even less likely.
Xanthippas, we’ve always had blockquote fail. And we’ve always been at war with Eurasia.
My thought reading that: only $3.7 billion?
Xanthippas: nah, just say you meant it as entirely apt for the thread / topic. The form of your text molded itself to represent the subject at hand. Form followed function. blah blah blah.
I doubt we’ll be able to distinguish individual waves during the next leg – the housing stuff hasn’t let up either, although the worst of the sub-prime may be passing.
The Grand Panjandrum
It was very encouraging to read that the FDIC is also running out of money to back up all our bank deposits. Oh goody.
@Xanthippas: I had begun to wonder if our unnecessary war in Iraq wasn’t just a misdirection play by the Bushies so his buddies could loot the Treasury. Then I remembered that Obama and the Congressional Democrats haven’t done much to rid us of this festering boil either. Oh well, I’d love to blame it on the Crawford, TX Village Idiot but our guys are on the hook too.
Naw, it’ll be fine, stop worrying.
(sticks fingers in ears, closes eyes, sings “la la la la la”)
There. That’s better. Hey, how ’bout that kidnapped woman who resurfaced?
(reads today’s top news story at WaPo, titled “Banks ‘Too Big to Fail’ Have Grown Even Bigger”)
Um . . .
(“la la la la la”)
Don’t forget the “toxic assets” that were the initial problem and that had to be taken off the banks’ hands by the government to prevent the banks from failing. The banks are still holding those “no-longer-toxic assets”since, instead of buying them, the government merely changed the accounting rules so that banks could carry them on the books at pretty much any value the banks wanted to state for them.
And the number of “problem banks” increased to 416, from 305 in the first quarter, and is expected to remain high.
I wish reporters would stop using the number of banks as some kind of indicator. Using the total deposits at risk would be much, much better. The distribution of bank sizes seems to follow some kind of power law, with the top 20 have an overwhelming percentage of the deposits, and hundreds in the tail having deposits in the low 10s of millions.
But this is the same media that takes Gingrich seriously, so…
Yeah me too, but I have yet to meet a politician who doesn’t like campaign contributions. Or at least one that got elected more than once.
Montysano (All Hail Marx & Lennon)
About a month ago, Roubini said something along the lines of “Well, there’s still the matter of how to deleverage $40T+ swaps and other toxic securitized debt.”
If I read him correctly, the worst shit is still hovering just out of sight. The Fed and the bankers are just whistling past the graveyard/kicking the can down the road (pick your metaphor).
I don’t expect to see a hard, fast crash. I believe Kunstler nailed it: “The Long Emergency”.
Yesterday I moved more money out of equities. I don’t see how the market can avoid tanking again. Exactly which fundamentals are driving the current rise? Every place I look, I see crappy numbers and folks trying to put the best face on them.
Last fall, I closed my accounts at BoA and put them into a local credit union. I want to have as little as possible to do with these POS bankers. I just wish someone in gov’t had the balls to regulate their TBTF asses into more manageable entities.
I know, I know. Money talks…
J. A. Baker
About two weeks before the midterms. The pirates of the financial sector saw which way the political winds were blowing, and decided to time the credit crunch so that it fell into the lap of Bush’s successor to clean up. Now they’re setting Obama up again so that when the shit hits the fan on his watch, they can say “See what happens when you let a Kenyan Marxislamohomofeminazifascist Muslim Manchurian Candidate handle your money?”
But then, I’m just cynical like that.
I saw this article a couple weeks ago about Maguire Properties, one of the bigger commercial property owners in the area, and how they were planning to (and may have already) hand over 7 of their buildings to creditors because the buildings are now worth less than their mortgages and are not generating enough cash to service the debt ($1.06 billion) and finance leasing expenses.
I recently drove down Sepulveda Blvd. in Torrance, CA. There is a section of it that has quite a few high-rise commercial buildings and they USED to be almost 100% occupied, but passing them now all you see are “For Lease” signs – except the ones that have already been foreclosed or given back, which have larger signs indicating the property is available for purchase. Right beneath the distress of the current building owner, of course, is that each vacant office unit represent another company that either went out of business or had to jettison that location to rein in expenses.
licensed to kill time
just practicing on an old thread
This is an interesting new talking point:
this from Ezra Klein
licensed to kill time
another practice run
So, Cheney really helped to keep us safe.
(I may be getting the hang of this)
licensed to kill time
(oops, paragraph fail… try again)