by Calculated Risk on 12/19/2009 12:49:00 PM

Bernanke misspoke in the recent TIME magazine interview:

TIME: Do you have a mortgage?

Bernanke: Oh, yes, we refinanced.

TIME: Oh, perfect. When?

Bernanke: About 5%. A couple of months ago.

TIME: Good time.

Bernanke: Yes. We had to do it because we had an adjustable rate mortgage and it exploded, so we had to.

TIME: So, did you get a fixed rate at 5%? I think this might be the most valuable piece of information. (Laughter.)

Bernanke: Thirty years fixed rate at a little over 5%.

Bernanke did have an adjustable rate mortgage, but it did not "explode".

First, Dr. Bernanke is the Fed Chairman and "exploding" ARMs are a very important mortgage issue. So I think this topic is relevant and newsworthy (and Bernanke mentioned it).

Second, "explode" has a very clear meaning when discussing mortgages; it means that the borrower's mortgage payment has increased sharply. An ARM can "explode" for two reasons:

1) The interest rate can reset to a much higher level. This isn't much of a concern right now because the most common indexes like LIBOR are at very low levels and most loans are resetting lower.

2) The loan can recast. From Tanta on resets and recasts:

"Reset" refers to a rate change. "Recast" refers to a payment change. ... "Recast" is really just a shorter word for "reamortize": you take the new interest rate, the current balance, and the remaining term of the loan, and recalculate a new payment that will fully amortize the loan over the remaining term.

Neither applied to Bernanke. From the WSJ: Looking a Little Deeper at Bernanke’s Floating Rate Mortgage

The Fed chairman was in an adjustable rate mortgage with a rate that started at 4.125% in 2004 and adjusted after five years to a rate that would be 2.25 percentage points above one-year Libor, which as of the first reset date in June was a little more than one and a half percent. That suggest his costs wouldn’t be exploding now, as the interview suggested. In fact, they’d be going down.

So Bernanke refinanced into a loan with a higher interest rate and with a larger mortgage payment for the security of a fixed rate. This suggests he thinks fixed mortgage rates have bottomed (otherwise he could have paid less on his mortgage, at a 3.75% interest rate, and then refinanced next year). He did not "have to do it".

by Calculated Risk on 12/19/2009 10:01:00 AM

From the WaPo: For retailers, snow would pile on

Retailers can stop accusing the economy of holding back holiday sales. Now they can blame it on the weather.

The mighty blizzard expected to descend on the Northeast today comes on the last Saturday before Christmas, typically the busiest day of the year for retailers. But with as much as a foot of snow forecast from North Carolina to New Jersey, retailers are worried that their customers will spend the Super Saturday shoveling rather than shopping. One meteorologist predicts that could result in a retail snowmaggedon.

Blame it on the weather!

by Calculated Risk on 12/19/2009 08:40:00 AM

The Senate passed another extension of unemployment benefits and Cobra insurance premiums this morning as part of the Defense spending bill. This bill had already passed the House.

In addition to the defense spending, the bill contained an extension of the date for qualification for existing tiers of unemployment benefits to Feb. 28th 2010 (previously only those losing benefits by Dec 31, 2009 qualified). Also the Cobra insurance premium subsidy was extended for two months.

This issue will be revisited early next year for those losing benefits after February.

From the WSJ: Senate Sends Defense Bill to Obama

by Calculated Risk on 12/19/2009 12:11:00 AM

From the WSJ: Down-Payment Standards Eased

Earlier this month, MGIC removed New Orleans, Dover, Del., Akron, Ohio, and four other areas in Ohio from its list of restricted markets. ...

Under the looser requirements, a borrower with a credit score of 680 or higher in New Orleans, for instance, can finance up to 95% of a home's value. Before the change, a borrower who wanted to finance that much of a home's value would have needed a credit score of at least 700.

In September, Genworth Financial Inc. winnowed its list of declining and distressed markets to five states: Arizona, California, Florida, Michigan and Nevada.

The changes are small. As the article notes, this is due to slightly improved markets and an attempt to regain market share from the FHA.

I wonder if this is related - just two weeks ago: Wisconsin Regulator Approves MGIC Regulatory Cap Waiver Thru 2011 (ht jb)

Mortgage insurance giant MGIC Investment Corp. (MTG) announced, Thursday, that the Office of the Commissioner of Insurance for the State of Wisconsin approved the company’s revised business plan and agreed to waive minimum regulatory capital requirements until Dec. 31, 2011.

by Calculated Risk on 12/18/2009 09:30:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

NOTE: This was compiled prior to the bank failures today.

Changes and comments from surferdude808:

The OCC released its actions for November, which contributed to an increase in the number of institutions and aggregate assets on the Unofficial Problem Bank List. The list includes 551 institutions with aggregate assets of $305 billion, up from 539 institutions with assets of $298 billion last week.

Removals this week include the three failures Friday – SolutionsBank ($511 million), Republic Federal Bank National Association ($433 million), and Valley Capital Bank, National Association ($40 million).

This week, 15 institutions with total assets of $8.1 billion were added to Unofficial Problem Bank List. Large additions include Riverside National Bank of Florida, Fort Pierce, FL ($3.5 billion); First Community Bank, National Association, Sugar Land, TX ($855 million); Beach First National Bank, Myrtle Beach, SC ($646 million); and First Bank Richmond, National Association, Richmond, IN ($637 million).

Two weeks ago, we removed Riverside National Bank, First National Bank of the Rockies, and First National Bank of Griffin and, last week, we removed Beach First National Bank, when the OCC terminated their Formal Agreements. As mentioned then, the OCC may replace the terminated Formal Agreement with another action; hence, this week these four banks come back on the list as they are now under a Consent Agreement.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

Note: The FDIC announced there were 552 bank on the official Problem Bank list at the end of Q3. The difference is a mostly a matter of timing - some enforcement actions haven't been announced yet, and others may be pending.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 12/18/2009 08:04:00 PM

One Forty arrives
Sun sets on First Federal
Death by Option ARMs
by Soylent Green is People
From the FDIC: OneWest Bank, FSB, Pasadena, California, Assumes All of the Deposits of First Federal Bank of California, Santa Monica, California

First Federal Bank of California, a Federal Savings Bank, Santa Monica, California, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver....

As of September 30, 2009, First Federal Bank of California had approximately $6.1 billion in total assets and $4.5 billion in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $146.3 million. ... First Federal Bank of California is the 140th FDIC-insured institution to fail in the nation this year, and the seventeenth in California. The last FDIC-insured institution to be closed in the state was Imperial Capital Bank, La Jolla, earlier today.

That makes seven today ...

by Calculated Risk on 12/18/2009 07:46:00 PM

Zero capital
Imperial imperiled
Taxpayers rescue
by Soylent Green is People
From the FDIC: City National Bank, Los Angeles, California, Assumes All of the Deposits of Imperial Capital Bank, La Jolla, California

Imperial Capital Bank, La Jolla, California, was closed today by the California Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of September 30, 2009, Imperial Capital Bank had approximately $4.0 billion in total assets and $2.8 billion in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $619.2 million. .... Imperial Capital Bank is the 139th FDIC-insured institution to fail in the nation this year, and the sixteenth in California. The last FDIC-insured institution closed in the state was Pacific Coast National Bank, San Clemente, on November 13, 2009.

by Calculated Risk on 12/18/2009 06:29:00 PM

Peoples, Citizens
New South Federal Savings
One Forty Is Near

An Oxymoron
Independent Bankers Bank
Not since Five today.
by Soylent Green is People
From the FDIC: Hancock Bank, Gulfport, Mississippi, Assumes All of the Deposits of Peoples First Community Bank, Panama City, Florida

Peoples First Community Bank, Panama City, Florida, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver....

As of September 30, 2009, Peoples First Community Bank had approximately $1.8 billion in total assets and $1.7 billion in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $556.7 million. ... Peoples First Community Bank is the 135th FDIC-insured institution to fail in the nation this year, and the fourteenth in Florida. The last FDIC-insured institution closed in the state was Republic Federal Bank, N.A., Miami, on December 11, 2009.

From the FDIC: FDIC Creates a Deposit Insurance National Bank to Facilitate the Resolution of Citizens State Bank, New Baltimore, Michigan

Citizens State Bank, New Baltimore, Michigan, was closed today by the Michigan Office of Financial and Insurance Regulation, which then appointed Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of September 30, 2009, Citizens State Bank had $168.6 million in total assets and $157.1 million in total deposits. ...

The cost to the FDIC's Deposit Insurance Fund is estimated to be $76.6 million. Citizens State Bank is the 136th bank to fail this year and the fourth in Michigan. The last FDIC-insured institution closed in the state was Home Federal Savings Bank, Detroit, on November 6, 2009

From the FDIC: Beal Bank, Plano, Texas, Assumes All of the Deposits of New South Federal Savings Bank, Irondale, Alabama

New South Federal Savings Bank, Irondale, Alabama, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of September 30, 2009, New South Federal Savings Bank had approximately $1.5 billion in total assets and $1.2 billion in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $212.3 million. ... New South Federal Savings Bank is the 137th FDIC-insured institution to fail in the nation this year, and the third in Alabama. The last FDIC-insured institution closed in the state was CapitalSouth Bank, Birmingham, on August 21, 2009.

From the FDIC: FDIC Creates Bridge Bank to Take Over Operations of Independent Bankers' Bank, Springfield, Illinois

The Federal Deposit Insurance Corporation (FDIC) created a bridge bank to take over the operations of Independent Bankers' Bank, Springfield, Illinois, after the bank was closed today by the Illinois Department of Financial and Professional Regulation—Division of Banking, which appointed the FDIC as receiver. ...

As of September 30, 2009, Independent Bankers' Bank had approximately $585.5 million in assets and $511.5 in deposits. At the time of closing, the bank had an estimated $269,000 in uninsured funds. ...

The FDIC estimates that the cost to the Deposit Insurance Fund will be $68.4 million. Independent Bankers' Bank is the 138th bank to fail in the nation this year and the twenty-first in Illinois. The last FDIC-insured institution to fail in the state was Benchmark Bank, Aurora, on December 4, 2009.

Three banks today with no buyer!

by Calculated Risk on 12/18/2009 05:12:00 PM

What happened down South?
Georgian banks fuel the collapse
A Rockbridge too far
by Soylent Green is People
From the FDIC: FDIC Approves the Payout of the Insured Deposits of Rockbridge Commercial Bank, Atlanta, Georgia

The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of RockBridge Commercial Bank, Atlanta, Georgia. ...

The FDIC was unable to find another financial institution to take over the banking operations of RockBridge Commercial Bank. ...

As of September 30, 2009, RockBridge Commercial Bank had approximately $294.0 million in total assets and $291.7 million in total deposits. At the time of closing, the bank had an estimated $2.1 million in uninsured funds. ...

RockBridge Commercial Bank is the 134th FDIC-insured institution to fail this year and the twenty-fifth in Georgia since The Buckhead Community Bank, Atlanta, was closed on December 4, 2009. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $124.2 million.

No buyers - a bad sign. And $2.1 million uninsured?

by Calculated Risk on 12/18/2009 04:35:00 PM

From Bloomberg: Moody’s Reviews $143 Billion of Jumbo-Mortgage Bonds (ht Bob_in_MA)

Moody’s Investors Service placed $143 billion of jumbo-mortgage bonds under review for downgrades ... The revisions were prompted by “the rapidly deteriorating performance of jumbo pools in conjunction with macroeconomic conditions that remain under duress,” Moody’s said.

... An “overhang of impending foreclosures will impact home prices negatively,” with values likely to decline 9 percent more ... U.S. unemployment will rise to peak at about 10.6 percent ...

Moody’s also said it expects the U.S. government’s effort to curb foreclosures to be less effective than it previously expected because the programs have “failed to gain traction.”
emphasis added

The problems are moving on up the value chain.

This is a follow-up to this story yesterday: Luxury-Home Owners in U.S. Use ‘Short Sales’ as Defaults Rise (many hts!)