Fifty-one banks have failed since January, 2011 but this is not widely reported. Also not widely reported is the departure of Sheila Bair as chairman of the FDIC. The cost to the US taxpayer for last week’s three bank closings was $590.4 million. Since the FDIC insurance fund is underwater, the US taxpayers are responsible for all debts of the United States under a new interpretation of the 14th amendment, section 4:
4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.
The other component to this story is the number of “troubled banks” as defined below.
The Federal Deposit Insurance Corporation, the federal agency in charge of safeguarding the nation’s bank deposits, maintains a Problem Bank List. This list contains the names of institutions that are likely to have weak capital positions that can lead to failure. The FDIC does not publicize the list for fear of causing a run on the bank.
The correlation between the number of troubled banks and the Obama administration’s economic policies is easily discerned. One bank that is not on the unpublished troubled bank list is First-Citizens Bank and Trust Company in Raleigh, NC. They have been on the receiving end of the administration’s generosity to banks willing to “take over” troubled banks. The latest gift to them is shown below.
As the US dollar is under pressure to be replaced as the sole world’s reserve currency, our banks are one short step away from a major collapse. The consequences of a banking collapse are also easily discerned.
David DeGerolamo
| FOR IMMEDIATE RELEASE July 8, 2011 |
Colorado Capital Bank, Castle Rock, Colorado, was closed today by the Colorado Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of Colorado Capital Bank.
The seven branches of Colorado Capital Bank will reopen on Monday as branches of First-Citizens Bank & Trust Company. Depositors of Colorado Capital Bank will automatically become depositors of First-Citizens Bank & Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits. Customers of Colorado Capital Bank should continue to use their existing branch until they receive notice from First-Citizens Bank & Trust Company that it has completed systems changes to allow other First-Citizens Bank & Trust Company branches to process their accounts as well.
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As of March 31, 2011, Colorado Capital Bank had approximately $717.5 million in total assets and $672.8 million in total deposits. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank & Trust Company agreed to purchase essentially all of the assets.
The FDIC and First-Citizens Bank & Trust Company entered into a loss-share transaction on $580.0 million of Colorado Capital Bank’s assets. First-Citizens Bank & Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-share transaction is projected to maximize returns on the assets covered by keeping them in the private sector. The transaction also is expected to minimize disruptions for loan customers. For more information on loss share, please visit: http://www.fdic.gov/bank/individual/failed/lossshare/index.html.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $283.8 million. Compared to other alternatives, First-Citizens Bank & Trust Company’s acquisition was the least costly resolution for the FDIC’s DIF. Colorado Capital Bank is the 50th FDIC-insured institution to fail in the nation this year, and the third in Colorado. The last FDIC-insured institution closed in the state was FirsTier Bank, Louisville, on January 28, 2011.
