by Calculated Risk on 3/06/2010 10:32:00 AM

From Hilary Stout at the NY Times: The Renter Roadblock (ht Brian)

Over the past year or two, many owners who couldn’t sell — or didn’t dare try — made a ... calculation [to rent]. Rather than accept an impossibly low offer (if they even had an offer), they decided to rent out their properties. The idea was to cover expenses while waiting for the market to right itself.

But in recent months, a number of these accidental landlords have been surprised to find renewed buyer interest in their properties. The problem is, the renters are happily in place.

These accidental landlords are part of the "shadow inventory".

My definition of "shadow inventory" are units that aren't currently listed on the market, but will probably be listed soon. This includes REOs (bank Real Estate Owned) that are not currently listed, foreclosures in process and seriously delinquent loans (although some of these may be cured, and some may already be listed as short sales), unlisted new high rise condos (these properties are not included in the new home inventory report) and homeowners waiting for a better market.

That last category includes all the accidental landlords that we've been discussing for years. As the NY Times article suggests, some of these accidental landlords might test the market this year. And there are probably quite a few of them - in a recent interview with Jon Lansner of the O.C. Register, Scott Monroe of South Coast Apartment Association said

"... our members are saying that they are competing quite a bit with what historically has not been a competitor for us - that's the gray market or the shadow market - which are condominium rentals and single family home rentals and things of that nature. There is just a lot of product on the market."

My estimate is about 3.6 million units were converted from owner occupied (or 2nd home) to rental over the last 5 years.

This included investors buying REOs for cash flow, condo "reconversions", builders changing the intent of new construction (started as condos but became rentals), and homeowners renting their previous homes instead of selling. But whatever the reason, many of these properties will probably be offered for sale again - especially the properties owned by the accidental landlords.

by Calculated Risk on 3/06/2010 09:08:00 AM

A few quotes:

From Dow Jones: Zhou Signals Yuan Policy Shift

"We don't rule out that during some special periods--such as the Asian Financial crisis and the global financial crisis this time--we adopted special policies, including a special exchange rate mechanism," [China central bank Gov. Zhou Xiaochuan] said at a news briefing during the annual session of the legislature, the National People's Congress.

"Sooner or later, we will exit the policies," he said

Bloomberg: Zhou Says China Should Be ‘Very Cautious’ in Crisis Exit

“We must be very cautious about the timing of normalizing the policies, and this includes the renminbi rate policy,” Zhou said at a press briefing in Beijing today, using another term for the Chinese currency. A global recovery “isn’t solid,” he said.

From Reuters: Days of "special" yuan policy numbered-China c.banker

"Practice has shown that these policies have been positive, contributing to the recovery of both our country's economy and the global economy," Zhou told a news conference.

But he added: "The problem of how to exit from these policies arises sooner or later."
...
"If we are to exit from these irregular policies and return to ordinary economic policies, we must be extremely prudent about our choice of timing. This also includes the renminbi exchange rate policy," he added.
...
Zhou was speaking after the bank issued a statement reaffirming a pledge made a day earlier by Premier Wen Jiabao to keep the yuan "basically stable" in 2010.

"Basically stable" probably gives some room for appreciation of the yuan.

China had been letting the yuan appreciate slowly, but pegged the yuan to the dollar when the financial crisis started. This has helped China recover, but the fixed exchange rate is a key issue that needs to be resolved.

by Calculated Risk on 3/05/2010 10:14:00 PM

This is an unofficial list of Problem Banks compiled only from public sources. Changes and comments from surferdude808:

Failure Friday contributed to a drop in the number of institutions on the Unofficial Problem Bank List. This week, the list includes 641 institutions with aggregate assets of $325.5 billion, down from 644 institutions and 325.9 billion last week.

There were 2 additions this week -- Mountain 1st Bank & Trust Company, Hendersonville, NC ($803 million Ticker: FFIS.OB); and Bank of Coral Gables, Coral Gables, FL ($159 million).

Removals include the 4 failures this Friday -- Sun American Bank ($536 million); Centennial Bank ($215 million); Bank of Illinois ($212 million); and Waterfield Bank ($156 million). There was one other removal as the OCC terminated the Formal Agreement against Community National Bank, Waterloo, IA ($235 million).

The other change is a Prompt Corrective Action Order issued against First Federal Bank of North Florida ($393 million), which has been operating under a Cease & Desist Order since November 2009.

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.

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 3/05/2010 08:12:00 PM

A nick in Utah
Death by one thousand small cuts
The Fed sanguinates
by Soylent Green is People
From the FDIC: FDIC Approves the Payout of the Insured Deposits of Centennial Bank, Ogden, Utah

The Federal Deposit Insurance Corporation (FDIC) approved the payout of the insured deposits of Centennial Bank, Ogden, Utah. ...

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

As of December 31, 2009, Centennial Bank had approximately $215.2 million in total assets and $205.1 million in total deposits. ...

Centennial Bank is the 26th FDIC-insured institution to fail this year and the second in Utah since Barnes Banking Company, Kaysville, was closed on January 15, 2010. The FDIC estimates the cost of the failure to its Deposit Insurance Fund to be approximately $96.3 million.

Another bank that no one wanted ...

by Calculated Risk on 3/05/2010 06:12:00 PM

From ivory towers
Bankers sneer at citizens:
Our loss,... your burden.

February rain.
March green shoots did not flower
These banks push daisies.
by Soylent Green is People
From the FDIC: Heartland Bank and Trust Company, Bloomington, Illinois, Assumes All of the Deposits of Bank of Illinois, Normal, Illinois

Bank of Illinois, Normal, Illinois, was closed today by the Illinois Department of Financial Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, Bank of Illinois had approximately $211.7 million in total assets and $198.5 million in total deposits....

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $53.7 million. ... Bank of Illinois is the 24th FDIC-insured institution to fail in the nation this year, and the third in Illinois. The last FDIC-insured institution closed in the state was George Washington Savings Bank, Orland Park, on February 19, 2010.

From the FDIC: FDIC Creates a New Depository Institution to Assume the Operations of Waterfield Bank, Germantown, Maryland

Waterfield Bank, Germantown, Maryland, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, Waterfield Bank had $155.6 million in assets and $156.4 million in deposits. At the time of closing, the amount of deposits exceeding the insurance limits totaled about $407,000. ...

The FDIC estimates that the cost to its Deposit Insurance Fund will be $51.0 million. Waterfield Bank is the 25th bank to fail in the nation this year and the first in Maryland. The last FDIC-insured institution to fail in the state was Bradford Bank, Baltimore, on August 28, 2009.

No one wanted Waterfield ...