Saturday, March 28, 2009

Forecast: Two-thirds of California banks to face Regulatory Action

by Bill McBride on 3/28/2009 09:54:00 AM

From the LA Times: FDIC orders changes at six California banks

[T]he Federal Deposit Insurance Corp. disclosed Friday that it had ordered six more California banks to clean up their acts in February after the agency examined their books and operations.
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The number of such regulatory actions has been increasing rapidly.
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By the end of 2009, two-thirds of the state's banks will be operating under cease-and-desist orders or other regulatory actions, Anaheim-based banking consultant Gary S. Findley predicts.
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Most banks targeted in such actions eventually tighten up operations and continue in business or merge with stronger institutions, but regulators are preparing for a major wave of failures.
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In addition to public cease-and-desist orders, banks are subject to a variety of regulatory sanctions, including so-called memorandums of understanding, which are informal directives to correct problems. Regulators don't release those memos, but banks sometimes disclose them to shareholders.
So far 21 FDIC insured banks have failed this year, and 3 in California. There will probably be many more ...