Friday, May 8, 2009

FDIC Failure Friday: Casualty #33, And More On The Stress Test

Just like a Swiss watch, bank failure #33 for the year is Westsound Bank, of Bremerton, Washington. The bank's assets will be assumed by Kitsap Bank of Port Orchard.
As of March 31, 2009, Westsound Bank had total assets of $334.6 million and total deposits of $304.5 million. Kitsap will not assume the approximately $9.4 million in brokered deposits. The FDIC will pay the brokers directly. Customers who placed money with brokers should contact them directly for more information about the status of their deposits.
So aside from the weekly collapse of the peripheral banking system and the gamed stress test, everything is ok.

And speaking of gaming the stress tests, the WSJ is out with this article which even a few weeks ago would have been (marginally) shocking, but at this point draws only sighs of resignation.
The Federal Reserve at the last minute significantly scaled back the size of the capital hole facing some of the nation's biggest banks, following days of intense bargaining over the stringency of the stress tests.

When the Fed last month informed banks of its preliminary stress-test findings, executives at banks including Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. were furious... At Fifth Third, the Fed was preparing to tell the Cincinnati- based bank to find $2.6 billion in capital, but the final tally dropped to $1.1 billion.
Luckily there is such a thing known as regulatory supervision of massive financial impropriety, known as the Securities & Exchange Commission, which will imminently investigate these allegations of political manipulations within the "stress" test, which has somehow ended up being merely a means of suckering yet more naive investors' cash to hurt the few brave souls still short, under the guise that everything with our banking system is ok. After all, on the charter page of the SEC, one finds the following fairy tale:
The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
At this point one gets tired of even being indignant. Sphere: Related Content
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