Two More Banks Bite the Dust

Just a couple of quick notes today.

The FDIC announced two more bank failures on Friday. Here is the information from the FDIC. :

"First National Bank of Nevada, Reno, Nevada, and First Heritage Bank, N.A., Newport Beach, California (owned by First National Bank Holding Company, Scottsdale, Arizona), were closed today by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) was named receiver. The FDIC entered into purchase and assumption agreements with Mutual of Omaha Bank, Omaha, Nebraska, to take over all of the deposits and certain assets of the First National Bank of Nevada, Reno (also operating as First National Bank of Arizona, which recently merged into it), and First Heritage Bank, N.A., Newport Beach, California.

The 28 offices of the two banks will reopen on Monday as branches of Mutual of Omaha Bank. All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Mutual of Omaha Bank for the full amount of their deposits. Depositors will continue to be insured with Mutual of Omaha Bank so there is no need for customers to change their banking relationship to retain their deposit insurance.

Over the weekend, customers of the banks can access their money by writing checks or using ATM or debit cards. Checks drawn on the banks will be processed normally. Loan customers should continue to make loan payments as usual.

Of the 10 institutions that have failed over the past two years, this is the second time in which another bank acquired all of the failing banks' insured and uninsured deposits. Mutual of Omaha Bank's acquisition of all deposits was the "least costly" resolution for the Deposit Insurance Fund compared to all alternatives because the expected losses to uninsured depositors were fully covered by the premium paid for the banks' franchises.
As of June 30, 2008, First National of Nevada had total assets of $3.4 billion and total deposits of $3.0 billion. First Heritage Bank had total assets of $254 million and total deposits of $233 million."

My Take:

Its not a surprise that both banks are in the bubble areas of the housing market. If you live in a "bubble area" please make sure you to some research on your bank. We have had three bank failures in just the past week in these areas when you include IndyMac.

There will be many more bank failures so be careful!

Senate Passes Housing Bill

The housing bill was passed 72-13 in the Senate this morning. There is no stopping this bill now. Bush will sign on the dotted line and Moral Hazard will officially be crossed.

The taxpayer is now officially screwed. Its going to take a couple of generations to pay off this "bubble debt". This is a very sad day for America! Its extremely frustrating to see such a bullshit bill pass so overwhelmingly.

Congratulations pigmen! You were bailed out once again!

Lets see how the bond market reacts to the news next week.