Friday, October 30, 2009
Bank seizures belie news about improving economy
Today's news that U.S. regulators had seized nine Western banks is a sure sign that the world's largest economy is still in crisis, even while federal officials and traders on the New York Stock Exchange behave as if the nation's financial system has already recovered. The nine failed banks owned by FBOP Corp., an Illinois-based bank holding company, and their scores of branches were acquired by U.S. Bancorp of Minneapolis, which owns 770 U.S. Bank branches in Illinois, Arizona and California. The largest of the nine banks, California National Bank of Los Angeles, had 68 branches in Southern California. The nine bank seizures were the most in a single day since the financial crisis began, according to the Reuters international news service. "We're getting ready to turn everything over to U.S. Bank," said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which is helping to supervise the transfer. "[The banks] will continue to operate as normal in the interim." Today's takeovers bring to 115 the number of bank failures in 2009, the most since 1992, and more are yet to come, Reuters said, as depressed commercial real estate prices make billions of dollars in loans uncollectable. Small banks are expected to be the hardest hit because they are not as diversified as larger banks, Reuters said. Other banks expecting to report big losses this year include Zions Bancorp of Salt Lake City, Columbus, Georgia's Synovus Financial Corp of Columbus, Georgia, and Comerica Inc. of Dallas. U.S. Bancorp has been helping to pick up the slumping industry in the West by buying Downey Savings of Newport Beach and PFF Bank & Trust of Pomona last November and, in October, buying 20 branches from BB&T Corp. in Nevada.