Email to Business Insider
I thought you might be interested in the email that i sent my Business Insider contacts. It relates to the analysis i did this morning on the 129 banks that the fdic has shutdown this year.
This morning i cranked out a little analysis on the 129 banks that the fdic has shutdown this year (2010), not counting yesterday’s three, and i thought you might find the attached spreadsheet worth your interest.
What I did was look up the non-performing asset to asset (NPA/Asset) ratio and the equity to asset (Equity/Asset) on the last financial quarterly report that each of the 129 banks submitted to the FDIC.
Of the 129, only 1 had an Eq/asset ratio greater than the NPA/Asset ratio. This is exactly what my point was in writing yesterday’s article.
As you will see from the spreadsheet, the total asset base for the 129 banks shutdown through Oct 1 this year is $83.8 billion. The weighted average (using the asset base as the weight) NPA/Asset ratio for these banks was a quite high 17.05%. The weighted average Eq/Asset ratio for these banks was a quite low 1.74%. In total then, the weighted average difference between the two (nonperforming assets and equity) thus is a whopping “negative” 15.31%.
If all the Equity = 100% of its value, and all NPA = 0% of its value, losses associated with the $83.8 billion would be $12.8 billion. If you double that amount for all the legal, accounting, professional fees, etc, the FDIC pays out and you probably have a pretty good ball park number for the cost to the FDIC. Remember, the figures i am showing you above are only for the 2010 shutdowns. When this financial crisis first began, the FDIC had about a $50 billion surplus, which from what i understand now is a $15 billion deficit.
Anyway, i think the attached spreadsheet is worth a glance. I might add that of the 129 bank shutdowns, the fdic helped merge 124 of them into currently active banks (who probably bought the good assets at what i would hope to be a fair market value (there are probably some additional fdic losses associated with the sale).
The other five banks the fdic shutdown permanently and paid off the depositors. All of that is also shown on the spreadsheet.
I also added the same current relative figures for the Big Four banks at the bottom, which provides you a fairly decent picture of the difference between those guys and the guys the fdic shuts down. And all of this information was and has been available to the Government and the public throughout this financial crisis. And it really makes you wonder what the Big Three (Paulsen, Bernanke, and Geithner) were thinking back in 2008 when they put TARP together.
I might also add that my own list of “Banks in Trouble” builds from the above analysis and i show another 380 or so banks with a total asset base of $200 billion. This is slightly less than half of what the fdic puts on their troubled bank list (which i just assume is more conservative than mine). I estimate the losses associated with those banks to be in the $12 billion range (which again you might double).
Oh well, just thought you might find this of some interest. It took all of about two hours to do this morning at no cost to anyone. Compare that to what we pay all the esteemed economists we have working in the Government and it might help you understand why we are in the kind of trouble that we are in.
ps. I intend to take look back further at all the fdic bank shutdowns since 2007, but that will take me a little longer. I just thought i would give you a preliminary look at things.