Regulators Close 9 Banks, Mostly in West

FDIC Shuts Branches in Ariz., Calif., Ill., and Texas; No. of Failed U.S. Banks This Year Now 115

(AP)  Regulators on Friday shut California National Bank of Los Angeles and eight smaller related banks as the weak economy continues to produce a stream of loan defaults.

The banks closed by the Federal Deposit Insurance Corporation were in California, Illinois, Texas and Arizona. They were divisions of privately-held FBOP Corp., a bank holding company based in Oak Park., Ill.

U.S. Bank in Minneapolis, a division of US Bancorp, agreed to assume the deposits and most of the assets of the banks. The banks had combined assets of $19.4 billion and deposits of $15.4 billion at the end of September, the FDIC said.

The nine banks had 153 offices, which will reopen as U.S. Bank branches Saturday.

FBOP Corp., which itself wasn't closed under the deal, grew from one bank with assets of $125 million in 1990. From 1990 to 2007 the company acquired 28 banks, according to its Web site.

The closing of nine banks in one day was the most the FDIC has shut since the financial crisis began taking down banks last year. The closings boost the number of failed U.S. banks this year to 115. In 1989, during the savings-and-loan crisis, the FDIC closed 534 banks, or about 10 a week.

California National Bank had 68 branches. About 100 FDIC employees arrived at the CalNational headquarters in downtown Los Angeles at around 6:15 p.m on Friday. They were seen fanning out into various offices around the building, a squat concrete structure that prominently displays the failed bank's name.

The FDIC simultaneously arrived at the bank's other branches, spokeswoman Roberta Valdez said. She said the FDIC would spend the weekend transferring the bank to U.S. Bank.

Besides California National Bank, the banks involved in the latest round were Bank USA, NA, in Phoenix; San Diego National Bank; Pacific National Bank in San Francisco; Park National Bank in Chicago; Community Bank of Lemont in Illinois; North Houston Bank, Madisonville State Bank, and Citizens National Bank in Teague, all in Texas.

Rick Hartnack, vice chairman of consumer banking for U.S. Bancorp, said the move complements its operations in California, Illinois and Arizona. The deal doubled the company's branches in California so that more than 20 percent of U.S. Bank's branch network will be in the state.

The company will have nearly 3,000 branches in two dozen states.

"California and Chicago turned out to be two of the most attractive markets in the country where we just didn't have the branch density that we wanted," he said.

US Bancorp in October reported a 4.7 percent increase in its third-quarter earnings and said it wasn't seen bad loans grow as fast as they had been earlier this year. The company's stock fell 99 cents, or 4.1 percent, to $23.22 as part of a broad slide in stocks Friday.

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the deposit insurance fund. It has fallen into the red.

The FDIC expects Friday's closings will cost the fund $2.5 billion. The FDIC and U.S. Bank agreed to share losses on about $14.4 billion of the combined purchased assets of $18.2 billion.

Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.

Also on Friday, agencies including the FDIC, the Federal Reserve and the Office of Thrift Supervision issued guidelines for banks modifying troubled commercial real estate loans. They emphasize the principle that modifying loans in a prudent manner is often in the best interest of both the bank and the creditworthy commercial borrower.

Financial Regulators Adopt Guidance on Prudent Commercial Real Estate Loan Workouts (Press Release)

The 115 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.

To replenish the fund, the FDIC wants the roughly 8,100 insured banks and savings institutions to pay in advance about $45 billion in premiums that would have been due over the next three years.

Depositors' money - insured up to $250,000 per account - is not at risk, with the FDIC backed by the government. The FDIC still has billions in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion - $100 billion of which does not require Treasury's approval.

The Obama administration recently proposed a plan to provide infusions of money to small banks at low interest rates, provided they agree to increase lending to small businesses. Banks and credit unions that serve low-income areas would get aid at even lower rates to help small businesses in the hardest-hit rural and urban areas. The aid would come from money still available in the $700 billion federal bailout fund, which went mostly to large banks.

The 115 bank failures this year compare with 25 last year and three in 2007.

Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.

The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.

[incog-nito]

How the "free enterprise" system works in America:

1) Give yourself huge bonuses no matter how badly the company performs.

2) Forget about all that "free enterprise" BS, and run to the government for a handout when in trouble.

3) If nothing works, declare bankruptcy and absolve yourself of all debts and obligations to investors. Give yourself more bonuses, or cash out with a huge golden parachute.

4) Raise more money from investors, or have your buddies from Wall Street use some of that 401K money. Start all over.

5) Tell the American public how great the free enterprise system is. They'll eat it up.

[MARYWILMA]

WHAT 2 PARTY SYSTEM???? WHAT WE HAVE IS RINO AND DINO. BOTH ARE SO CLOSE TOGETHER, THE AIM OF THEM IS TO TAKE OVER THE AMERICAN PEOPLE, AND TURN US INTO A SOCIALIST COUNTRY...IF WE DON'T CHANGE THINGS IN THE NEXT ELECTION BY GETTING THE CURRENT POLS OUT OF OFFICE AND ESPECIALLY THE SO CALLED PRESIDENT. WE NEED TERM LIMITS LOTS OF CONGRESS HAS BEEN AT THE PUBLIC TROUGH FOR 20 OR MORE YEARS.. THEIR PENSION PLAN IS A ROBBERY OF THE PEOPLE.. BRING THE NATIONAL GUARD HOME AND PUT THEM ON THE BORDERS. THE CURRENT BORDER PATROL IS NOT DOING THE JOB....THIS MEDICAL BILL NOW IN CONGRESS WILL BANKRUPT THE COUNTRY AND TAKE AWAY OUR RIGHTS TO CHOOSE... AND THAT IS JUST A START.. THEY ARE ALREADY BEGINNING TO TALK ABOUT A NATIONAL POLICE FORCE RUN BY WASHINGTON, THEREBY TAKING CONTROL OF ALL THE LAW ENFORCEMENT IN THE NATION.. THEY NEED TO GET THE GUNS FIRST TO KEEP THE PEOPLE IN LINE..AND THEY ARE WORKING HARD ON DOING THIS...THE SUPREME COURT WILL GUT THE SECOND AMENDMENT SOON...THEN THE ARMY WILL BE BREAKING DOWN YOUR DOOR TO GET YOUR GUNS , JUST LIKE THEY STARTED TO DO IN NEW ORLEANS.... FREEDOM IS IN REAL DANGER OF LEAVING THE USA.............

[berlinfoto-2009]

THE AIM OF THEM IS TO TAKE OVER THE AMERICAN PEOPLE, AND TURN US INTO A SOCIALIST COUNTRY...
THEY ARE ALREADY BEGINNING TO TALK ABOUT A NATIONAL POLICE FORCE RUN BY WASHINGTON, THEREBY TAKING CONTROL OF ALL THE LAW ENFORCEMENT IN THE NATION.
Socialists, no, maybe, National Socialists, or some form of Fascism, with a cashless society, and everyone will be microchipped. The Microchip, will allow for a electronic imposed GLEICHSCHLTUNG. The microchip allows for Schapitz type eingriff, Sorry for the German Words, America has not experienced NAZI, there fore it does not have words, to describe what is coming. I will include one definition, the others you should research yourself.
The following definition is from the book "NAZI-DEUTSCH NAZI GERMAN, An English Lexicon of the Language of the Third Reich, Robert Michael and Karin Doerr.
"GLEICHSHALTUNG. Consolidation. All of the German Volk's social, political, and cultural organizations to be controlled and run according to Nazi ideology and policy. All opposition to be eliminated."
But instead of controlling all organizations, in order to control individuals, all individuals will be controlled electronically with the use of the microchip, The chip can be located anywhere on the body under the skin, and it still will allow for control.

[troopf4]

us_1776: Bush signed the bill and the Democrats disbursed the monies - get ahold of your congressman and senator and yell at them..

[berlinfoto-2009]

This reminds me of a joke I once heard.
What is the best way to rob a bank?............. Become the banks president.
What is the best way to rule the World?.......... Become the worlds Policeman.

[kbbpll]

Where's Neil Bush these days? Eight years of brother GW and not a peep.

[bajajohn1]

There are a lot of dummies living on the West Coast. Many think they are cool but in reality many are dumber than a pile of rocks.

[searingtruth]

"Nothing for the poor.
Because they have been negligent and irresponsible.

Everything for the billionaires.
Because they have been negligent and irresponsible."
SearingTruth

A Future of the Brave

[13StinkyFeet]

johnpatrick1, you need a history lesson. read this all the way to the bottom http://www.cbsnews.com/stories/2008/09/19/opinion/main4460892.shtml

[johnpatrick1]

An ongoing result of the Republican Party's misrule through the lack of any REGULATION of their Rich Boy Buddies....let the good times roll! When are we going to jail bush-cheney and the whole crew of Republican nincompoops who have brought American to rack and ruin?????????????

[cidaia]

I thought Obama was going to fix the world, miracle-boy, wonder-worker, with the halo and everything?

Oh wait - he did: he gave lots and lots of money to the banks he's friends with, and he's watching the rest get closed down, so that the guys on his donor list won't have any competition.

Niiiccce. Hey let's talk about what's wrong with Republicans some more...

[troopf4]

Excuse me johnpatrick1: I had been a Democrat and worked in social Services when Bill Clinton decided every one should own a home: Can you say Fannie Mac/Freddie Mac; people allowed to use their income from welfare checks to qualify for a home. Barney Frank and Co. overseeing FM/FM/ McCain and Bush tried to regulate and the Barney Franks and lobbist crush that. So, lets tell it like it is, and lets not forget NAFTA under Bill Clinton - that's when the jobs went over seas. It took years for it to snowball. By the way - lest you forget - the Democrats have been in control since 2006 - (2) years prior to Bush leaving office.
The Democrats could have turned things around but instead the only thing they did was increase the amount of time off for their break - more time off to campaign. I'm an Independent and will remain so.
I'm sick and tired of almost a year in office re Obama and Co. and all anyone hears is it's all Bush's fault - the BS is starting to stink..No solutions, just excuses from Washington..

[us_1776]

None of the Bush T.A.R.P. 700 BILLION DOLLARS went to help any of the small banks. And small banks are what fund small business. This is partly why there are no jobs. Because small banks and small businesses have been hurt so badly.

If we don't start helping these small banks it will be a very long time before we recover the lost jobs.

[chonder2]

stn_sage-Better late than never.But a 3rd party needs a solid platform.

[curse914]

chonder2, start by abolishing the Electoral College. It is only a matter of time before the mob sees past the facade of partisan politics to the class system beneath.

[stn_sage]

'I'm beginning to believe a two party system is not representing the desires of the American people.' ---chonder2

'JUST' beginning?...how much more destruction has to occur BEFORE you become a believer?...just wondering!? Keep watching!

[chonder2]

Great report.

Another example of the total deregulation results brought on by paid for Ledgeslators such as Senator Phil Gramm.
This is what you people can expect in the future if you don't claw back your government from the corporations!
I'm beginning to believe that a two party system is not representing the desires of the American people.