by Calculated Risk on 8/14/2010 01:25:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for August 13, 2010.

Changes and comments from surferdude808:

The Unofficial Problem Bank List finishes the week at 813 institutions with aggregate assets of $417.8 billion.

The sole removal is the failed Palos Bank and Trust Company ($496 million).

There are four additions this week -- The Brand Banking Company, Lawrenceville, GA ($1.2 billion); Broadway Federal Bank, f.s.b, Los Angeles, CA ($530 million Ticker: BYFC); Liberty Savings Bank, FSB, Whiting, IN ($82 million); and Home Savings Bank, Jefferson, MO ($31 million).

The other change to report is a Prompt Corrective Action Order issued by the Federal Reserve against Paramount Bank ($283 million).

We anticipate the OCC will release its enforcement actions for July 2010 next Friday.

Note: The FDIC Q2 2010 Quarterly Banking Profile will be released the week of August 22nd.

by Calculated Risk on 8/14/2010 08:55:00 AM

Although not unexpected, the news flow is about to take a more negative tone starting with the existing home sales report on August 23rd. We've been discussing this for some time ... and I'd like to highlight just a few pieces of forthcoming data:

The existing home sales report will show that sales collapsed in July (this is showing up in all the regional reports).

The existing home months-of-supply will jump to double digits.

House prices are probably falling again, although this might not show up in the repeat sales indexes until September or October (this data is released with a lag).

On August 27th, the second estimate of Q2 GDP will be released. This will probably show a significant downward revision from the preliminary estimate of 2.4% annualized growth. The downward revision is due to lower construction spending than the BEA initially estimated, less contribution from inventory adjustments, and the June surge in exports.

The unemployment rate will probably start ticking up again soon (or the participation rate will fall further).

Just something to be aware of ...

by Calculated Risk on 8/13/2010 09:53:00 PM

This is a followup to my earlier post today on LA port traffic in July ...

From Ronald White at the LA Times: Ports wary of stunted holiday rush

The bad news for the ports of Los Angeles and Long Beach — part of a supply-chain infrastructure that employs dockworkers, truck drivers, railroad employees, warehouse and distribution center staffs and logistics experts — the big bump in holiday-season cargo jobs may not come this year.

Consumers remain very cautious about the safety of their own jobs, and retailers are paying attention to those signals, experts said.

"Retailers are monitoring demand very closely and hoping to see increases in employment and other areas that will boost consumer confidence," said Jonathan Gold, vice president for supply chain and customs policy for the National Retail Federation.

This is something to watch over the next few months. Exports have already slowed, and it is possible that import growth will slow too.

by Calculated Risk on 8/13/2010 08:10:00 PM

Palos Bank and Trust
Friday the thirteenth has come
Unlucky indeed!
by Soylent Green is People
From the FDIC: First Midwest Bank, Itasca, Illinois, Assumes All of the Deposits of Palos Bank and Trust Company, Palos Heights, Illinois

As of June 30, 2010, Palos Bank and Trust Company had approximately $493.4 million in total assets and $467.8 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $72.0 million. Compared to other alternatives, First Midwest Bank's acquisition was the least costly resolution for the FDIC's DIF. Palos Bank and Trust Company is the 110th FDIC-insured institution to fail in the nation this year, and the fourteenth in Illinois. The last FDIC-insured institution closed in the state was Ravenswood Bank, Chicago, on August 6, 2010.

It is Friday!

by Calculated Risk on 8/13/2010 05:21:00 PM

This data last month gave the first hint of the sharp increase in the U.S. trade deficit in June.

Notes: this data is not seasonally adjusted. There is a very distinct seasonal pattern for imports, but not for exports. LA area ports handle about 40% of the nation's container port traffic.

The following graph shows the loaded inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Click on graph for larger image in new window.

Loaded inbound traffic was up 26% compared to July 2009. Inbound traffic is now up 4% vs. two years ago (July '08).

Loaded outbound traffic was up 10% from July 2009. Exports were off almost 4% from May 2010. Unlike imports, exports are still off from 2 years ago (off 17%).

For imports there is usually a significant dip in either February or March, depending on the timing of the Chinese New Year, and then usually imports increase until late summer or early fall as retailers build inventory for the holiday season. So part of this increase in July imports is just the normal seasonal pattern.

Based on this data, it appears the trade deficit with Asia increased again in July. Not only have the pre-crisis global imbalances returned, but the flat line in exports, after declining in June, is concerning (there is no clear seasonal pattern for exports).

by Calculated Risk on 8/13/2010 03:40:00 PM

From CNBC: US 'Virtually Certain' to Fall Into A New Recession: Rosenberg

The risks of a double-dip recession—if we ever got out of the first one—are actually a lot higher than people are talking about right now," [David Rosenberg, chief economist at Gluskin Sheff] said. "I think that it's almost a foregone conclusion, a virtual certainty."

And here is an interview today of Rosenberg at the WSJ: The Big Interview with David Rosenberg

In an interview with WSJ's Kelly Evans, Gluskin Sheff's Chief Economist David Rosenberg warned that the chances of a double-dip recession are greater than 50-50 and that the recession may not have ended last year at all.

And Neil Irwin at the WaPo has a summary of a Goldman Sachs research note by Ed McKelvey: Goldman Sachs economists: No double dip (probably)

"We think a double dip [recession] has a meaningful probability--25 to 30% in our estimation--but it is not in our base case. A big reason for this judgment is that several key components of private-sector activity have already fallen to levels that are quite low relative to historical averages or underlying fundamentals."

"We note the following five sources of protection against a renewed downturn in economic activity--areas where we think the scope for further downside to US real GDP is limited."

I've made a number of the same arguments as McKelvey ... I noted that "usually a recession (or double-dip) is preceded by a sharp decline in Residential Investment (housing is the best leading indicator for the business cycle), and it [is] hard for RI to fall much further" and on the personal saving rate, I noted "most of the drag from a rising saving rate appears to be behind us".

I think we will avoid a technical double dip recession (or a continuation of the "great recession", see Recession Dating for the difference), but the odds are uncomfortably high - and it will probably feel like a recession to millions of Americans. It will be especially discouraging when the unemployment rate starts increasing again (I think that is likely) and when reported house prices start falling (very likely).