Your bank just locked its doors. Should you worry?
Pittsburgh: Forty people wearing red tee shirts and carrying signs marched right into a National City Bank last Friday morning. They chanted “Criminal Offenders, Predatory Lenders!” and blew whistles. They demanded an immediate halt to home foreclosures.
The group dispersed after police were called and nobody got arrested, but no one got any relief from foreclosure either. The demonstration was part of a national effort by the group ACORN, the Association of Community Organizations for Reform Now, which provides free counseling to low and moderate income home buyers. As more and more families lose their homes, ACORN hopes protest actions will become more and more visible.
From shelters and coalitions for the homeless all over the country, reports are coming in of overwhelmed facilities and no end in sight as new faces join the ranks of the homeless. The ‘lucky’ ones, about 76% of renters and homeowners displaced by the continuing mortgage crisis, are moving in with relatives and friends. The rest are on the streets, living in their cars, or filling emergency shelters. It’s going to get worse.
Meanwhile, the Federal Deposit Insurance Corporation, a.k.a. FDIC, reported in March the highest number of “problem institutions” it’s seen since the savings and loan crisis of the late 1980s. These tend to be smaller banks finding themselves short on required capital and facing failure due to construction loans secured by the value of those new homes, which are now worth just a fraction of the original estimated value.
So. What if you live in the suburbs in a neighborhood with more ‘For Sale’ signs than political placards in the yards, and your bank’s tellers are becoming less cheerful and helpful lately? What if the bank closed early on Saturday and suddenly a fleet of identical, nondescript rental cars show up in the parking lot, full of nondescript guys and gals in dark business suits carrying briefcases march in, and don’t leave?
The Charleston SC Post and Courier offers a blow-by-blow description by Damian Paletta of the Wall Street Journal, Anatomy of a bank failure: When the liquidators come calling that might help ease the jitters of those who wonder about just how ‘safe’ their money really is in these times of non-recession Depression…
First Integrity, which had two branches and $55 million in assets, was the fourth FDIC-insured bank to fail this year. That’s one more than during the entire three-year stretch leading up to 2008. Some analysts predict that as many as 150 banks, mostly small and medium-size, could fail over the next three years.
Those concerned about growing financial crisis that shows all signs of being far worse than anyone in the government, financial sector or mainstream press wants to admit should read Paletta’s article. So long as your deposits at the bank are $100,000 or less, it won’t disappear even if the bank fails. If you’ve got more than $100,000 in deposits, securities and other investments held by any single bank, it’s time to diversify – divvy them up and into unaffiliated institutions, each advertising that FDIC logo on the window.
Forewarned is forearmed. Just as the government won’t admit to recession, and routinely underreports all the important indicators – unemployment, home and business foreclosures, etc. – you can be sure they’re underreporting current and expected future bank failures too. Don’t get ‘liquidated’ if you can help it.
Links:
Family Storms Pittsburgh Bank, Protests Mortgage Crisis
New recession worry: Bank failures
Anatomy of a bank failure: When the liquidators come calling
New Faces Join Homeless Ranks