Friday, March 12, 2010

Report: Over 2000 Bank Enforcement Actions in 2009

by Bill McBride on 3/12/2010 10:01:00 PM

A couple excerpts from American Banker: Regulatory Actions Hit a Record Level in '09

  • "Bank regulators issued 1,143 formal enforcement actions against banks and their holding companies last year, a new record and more than double the 2008 tally."

  • "Informal actions by the agencies, which are not made public and often go untracked, also doubled during that time, reaching 1,099 last year, according to data provided to American Banker."

    According to the FDIC quarterly banking profile, there were 8,012 insured banks at the end of 2009. Some of these actions are double counts since regulators might issue an informal action and then a formal action against the same bank (or multiple formal actions), so we can't say the percentage of banks operating under enforcement actions (either formal or informal), but it could be in the 20% to 25% range.

    A couple of quotes from the article:
    "For the bank failures that have occurred so far, every one of the large loss reports the inspector general has done or any GAO investigation has concluded the reason the bank has failed is the regulator did not take early enough action or severe enough action." said [Bob Clarke, a senior partner at Bracewell & Giuliani LLP and former comptroller of the currency] said.
    I've posted a few of the inspector general reports, and it appears the field examiners identified the problems early - but then insufficient actions was taken. And to put it more bluntly:
    "The regulators were asleep for 10 years during the boom and there's now this remarkable turf war under way with regulatory reform," said Chris Low, chief economist for First Horizon National Corp.'s FTN Financial.