by Calculated Risk on 1/16/2009 07:37:00 PM

From the FDIC: Republic Bank of Chicago Acquires All the Deposits of National Bank of Commerce, Berkeley, IL (hat tip Soylent Green Is People)

National Bank of Commerce, Berkeley, Illinois, was closed today by the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Republic Bank of Chicago, Oak Brook, Illinois, to assume all of the deposits of National Bank of Commerce.
...
As of January 7, 2009, National Commerce Bank had total assets of $430.9 million and total deposits of $402.1 million. In addition to assuming all of the failed bank's deposits, Republic Bank agreed to purchase approximately $366.6 million in assets at a discount of $44.9 million. The FDIC will retain the remaining assets for later disposition.
...
The FDIC estimates that the cost to the Deposit Insurance Fund will be $97.1 million.

Now it feels like a Friday.

by Calculated Risk on 1/16/2009 05:33:00 PM

WSJ: Circuit City to Liquidate, Meaning 30,000 Job Losses

Bloomberg: GE Capital May Cut as Many as 11,000 Jobs This Year

WSJ: Pfizer to Cut Up to 2,400 Jobs

WSJ: Google Plans 100 Layoffs of Recruiters

AP: AMD to cut 1,100 workers, 9 pct of staff

Reuters: Hertz to cut more than 4,000 jobs

Bloomberg: WellPoint Cuts 1,500 Jobs, Blames ‘State of Economy’

AP: Blue Cross Blue Shield to cut up to 1,000 jobs

Tampa Bay Business Journal: Report: Layoffs looming at Clear Channel

I'm sure I missed a few ...

by Calculated Risk on 1/16/2009 04:24:00 PM

From the LA Times: California controller to suspend tax refunds, welfare checks (hat tips Thomas and Circle the Drain)

State Controller John Chiang announced today that his office would suspend tax refunds, welfare checks, student grants and other payments owed to Californians starting Feb. 1 ... The payments to be frozen include nearly $2 billion in tax refunds; $300 million in cash grants for needy families and the aged, blind and disabled; and $13 million in grants for college students.

by Calculated Risk on 1/16/2009 02:35:00 PM

From the CBO: The Troubled Asset Relief Program: Report on Transactions Through December 31, 2008

This is the first of CBO’s statutory reports on the TARP’s transactions. Through December 31, 2008, those transactions totaled $247 billion. Valuing those assets using procedures similar to those specified in the Federal Credit Reform Act (FCRA), but adjusting for market risk as specified in the EESA, CBO estimates that the subsidy cost of those transactions (broadly speaking, the difference between what the Treasury paid for the investments or lent to the firms and the market value of those transactions) amounts to $64 billion.

CBO calls its a "subsidy cost", others call it a "loss".

Click on table for larger image in new window.

Here is the CBO table of subsidies.

AIG and the auto companies are the big winners (in percent subsidy).

by Calculated Risk on 1/16/2009 10:53:00 AM

From CNBC: Circuit City Will Be Liquidated, Sources Say

Not good news for mall owners ...

Just a reminder, from Bloomberg last week: U.S. Shopping Mall Vacancies Reach 10-Year High as Stores Fail

Vacancies at U.S. malls and shopping centers approached 10-year highs in the fourth quarter, and are set to rise further as declining retail sales put more stores out of business, research firm Reis Inc. said.

Regional mall vacancies rose to 7.1 percent last quarter from 6.6 percent in the third quarter. It was the highest vacancy rate since Reis began tracking regional malls in 2000, as well as the largest quarter-to-quarter jump in vacancies, according to New York-based Reis.

At neighborhood and community shopping centers, the vacancy rate rose to 8.9 percent from 8.4 percent in the third quarter, the highest since Reis began publishing quarterly data in 1999.

by Calculated Risk on 1/16/2009 09:15:00 AM

From Greg Robb at MarketWatch: U.S. Dec. industrial production down 2%, down 11.5% in Q4

Capacity utilization ... fell to 73.6% from 75.2%. This is the lowest level since December 2001. Industrial output fell at an 11.5% rate in the fourth quarter.
emphasis added

Click on graph for larger image in new window.

This is a very sharp decline in industrial output, and industrial production is a key to the depth of the economic slowdown. Up until recently export growth had been strong, and the decline in industrial production had been mild. Now, with the global economy slowing sharply, industrial production and capacity utilization are falling off a cliff.

Also the significant decline in capacity utilization suggests less investment in non-residential structures for some time.

by Calculated Risk on 1/16/2009 08:34:00 AM

From Rex Nutting at MarketWatch: Consumer prices show smallest gain in 54 years

The consumer price index fell 0.7% in December, the third decline in a row, led by an 8.3% drop in energy prices and a 0.1% drop in food prices.
...
Core prices - which exclude food and energy prices - were flat in December for the second straight month ...

Consumer prices were up 0.1% in 2008, the slowest annual inflation since prices fell 0.7% in 1954. The core CPI was up 1.8% in 2008, the lowest increase since 2003.

More later on CPI.

by Calculated Risk on 1/16/2009 08:16:00 AM

From the WSJ: Bank of America Swings to a Loss

Bank of America Corp. swung to a fourth-quarter loss as provisions for credit-losses nearly tripled, while the company showed why it needed further help from the government to support its acquisition of Merrill Lynch, whose preliminary loss was $15.31 billion.

And from the WSJ: Citigroup Posts Loss, Splits Up Company

Citigroup Inc. reported an $8.29 billion net loss for the fourth quarter, putting the year's red ink at $18.72 billion, as the company announced it will reorganize into two business lines focused on banking and other financial services.

by Calculated Risk on 1/16/2009 12:24:00 AM

Press Release: Treasury, Federal Reserve, and the FDIC Provide Assistance to Bank of America

The U.S. government entered into an agreement today with Bank of America to provide a package of guarantees, liquidity access, and capital as part of its commitment to support financial market stability.

Treasury and the Federal Deposit Insurance Corporation will provide protection against the possibility of unusually large losses on an asset pool of approximately $118 billion of loans, securities backed by residential and commercial real estate loans, and other such assets, all of which have been marked to current market value. The large majority of these assets were assumed by Bank of America as a result of its acquisition of Merrill Lynch. The assets will remain on Bank of America's balance sheet. As a fee for this arrangement, Bank of America will issue preferred shares to the Treasury and FDIC. In addition and if necessary, the Federal Reserve stands ready to backstop residual risk in the asset pool through a non-recourse loan.

In addition, Treasury will invest $20 billion in Bank of America from the Troubled Assets Relief Program in exchange for preferred stock with an 8 percent dividend to the Treasury. Bank of America will comply with enhanced executive compensation restrictions and implement a mortgage loan modification program.

Treasury exercised this funding authority under the Emergency Economic Stabilization Act's Troubled Asset Relief Program (TARP). The investment was made under the Targeted Investment Program. The objective of this program is to foster financial market stability and thereby to strengthen the economy and protect American jobs, savings, and retirement security.

Separately, the FDIC board announced that it will soon propose rule changes to its Temporary Liquidity Guarantee Program to extend the maturity of the guarantee from three to up to 10 years where the debt is supported by collateral and the issuance supports new consumer lending.

With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy. As was stated in November when the first transaction under the Targeted Investment Program was announced, the U.S. government will continue to use all of our resources to preserve the strength of our banking institutions and promote the process of repair and recovery and to manage risks.

Term Sheet

by Calculated Risk on 1/15/2009 11:15:00 PM

From the NY Times: U.S. Said Close to Giving More to Bank of America

The program ... will hold Bank of America responsible for the first $10 billion in losses on a pool of $118 billion in illiquid assets. The government will take on the next $10 billion in losses and then taking on 90 percent of any additional losses with Bank of America absorbing the rest.

That puts the taxpayers on the line for close to $100 billion. What do we get for taking on this risk?

Hopefully we will have more details in the morning.