Jim Sinclair, "IMPORTANT NOTES ON FRIDAY'S BANK FAILURES"

found on RMN

Important Notes On Friday’s Bank Failures
Posted By Jim Sinclair On May 3, 2010 @ 12:26 am In General
My Dear Friends,
Please read this as you must understand the serious nature of what is taking place.
Regards,
Jim
Dear Jim,
The following are some additional thoughts on the seven bank failures announced by the FDIC on Friday, April 30, 2010.
1. Perspective on Losses
This week’s losses were extremely serious, a fact belied by the virtual absence of press coverage. They were the largest in any single week since the failure of IndyMac Bank on July 11, 2008.
IndyMac had assets of about $32 billion and deposits of $19 billion. Its failure cost the FDIC an estimated $8 billion.
The seven banks that failed this week had combined assets of about $25.8 billion and deposits of $19.6 billion. These failures cost the FDIC an estimated $7.33 billion.
Prior to this week, the FDIC’s estimated losses from 57 bank failures in 2010 stood at about $8.6 billion. This week’s failures practically doubled that figure, to $15.93 billion.
This information cannot be reconciled with the MOPE that states the banking sector has recovered. To the contrary, these failures speak of deeply-rooted problems in the banking sector that appear to be getting worse over time.
2. Status of the Deposit Insurance Fund
According to an AP article posted Friday (cited below), the FDIC’s deposit insurance fund “fell into the red last year, hitting a $20.9 billion deficit as of [Dec. 31, 2009].” With this year’s losses, the fund’s deficit has grown to at least $36.8 billion. In addition, the FDIC has a huge exposure for worse-than-expected losses on some $165 billion of assets taken over by acquiring banks.
That pretty much wipes out the $45 billion the FDIC announced it was going to raise by requiring banks to pre-pay premiums for the period, 2010 through 2012. Obligations of the FDIC will soon become obligations of the U.S. taxpayer, adding billions of dollars each year to already out-of-control federal deficits.
[snip to end - includes large excerpt of AP article]
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Full article, here:
http://jsmineset.com/2010/05/03/important-notes-on-fridays-bank-failures/