Archive for September, 2009

“Banking on A Hundred”

by jim_worth Posted: Wednesday, 9/30/2009

We’re just five (5) failures away from 100 failed banks in 2009. The Federal Deposit Insurance Corporation has now closed 95 banks so far this year.

Since September 4th, when the FDIC took over 5 banks, the number of banks failing has moderated. Over the last 3 weeks they have seized only 6 banks, the latest being Georgian Bank of Atlanta, the second largest bank based in Georgia’s biggest metropolitan area.

That now brings the total number of failed banks in the state of Georgia to 19 this year and 25 since August of 2008. Two weeks ago Illinois lost its 16th bank in ‘09 after only one failure in all of last year. The two states now account for over one third of all the 2009 bank foreclosures. By contrast California has 10 failed banks this year.

Georgian Bank had assets of $2 billion but lost $36.7 million in the second quarter. It was their 3rd consecutive quarterly loss. The closing of Georgian will cost the FDIC an estimated $892 million. That makes it the 6th most costly bank to the Federal Deposit Insurance Fund in 2009.

To date 39 banks have drained in excess of $100 million each from the fund with 12 of the 95 banks showing the cost unavailable. Bank United in Florida siphoned $4.9 billion and Guaranty in Austin cost the FDIC approximately $3 billion from the fund. Three (3) other banks required more than $1.3 billion each to complete the foreclosure.

Six (6) more banks have cost more than half a billion dollars. That’s billion with a B. And 28 more have required $100 million or more. How many more this year will require huge sums of money from the fund and at what point does the FDIC begin to rely on taxpayer money? Read the rest of this entry »

Tags: , , , ,
Posted in FDIC Foreclosures | Comments Off

“Challenging Cooperman”

by jim_worth Posted: Sunday, 9/27/2009

Last October the widely respected founder and Chairman of Omega Advisors, Mr. Leon Cooperman, saw signs of a bottom in the markets. The Dow was around 9,200 that day and the S&P was just below 1,000 points.

After reading his comments and based on my own informal research I sent Mr. Cooperman a letter and a copy of my book, “Final Audit.” I issued Mr. Cooperman a challenge, a friendly one, stating that the market would continue to tumble and that we would be lucky if it bottomed near 7,000 on the Dow and 740 on the S&P.

We know what happened in March!

Read the rest of this entry »

Tags: , , , , , , , , , , , ,
Posted in Economy, Markets, Predictions, Wall Street | Comments Off

“Shades of Enron and WorldCom”

by jim_worth Posted: Wednesday, 9/16/2009

Eight short years ago the Markets were shocked by the December bankruptcy filing of Enron, one of the largest corporations in the country. It was the biggest bankruptcy in history. Just six months later WorldCom filed bankruptcy becoming the new largest recorded bankruptcy.

These two failures shook the markets sending stocks into a tailspin. Enron became the poster child for corporate corruption and executive greed leading the way to a series of corporate scandals including Adelphia, Tyco, ImClone, and Global Crossing. The perfect setting for Murder!

The corruption and greed became the backdrop for “Final Audit,” an exciting novel about executives from bankrupt corporations dying. As I wrote this ‘mystriguing’ first novel my research took me beyond the immediate scandals to the avarice, arrogance, and abhorrent behavior prevalent in Corporate America.

Many were responsible for the collapses of Enron and WorldCom. But the important issue would be what they learned from the failures and what they would do to prevent this happening in the future.

So what did we learn? And how did we apply those lessons? Read the rest of this entry »

Tags: , , , , , , ,
Posted in Bankruptcy, Economy, Markets, Predictions, Uncategorized, Wall Street | Comments Off

“The Real Crime at AIG” (reposted)

by jim_worth Posted: Tuesday, 9/15/2009

One year after the fall of Lehman Brothers, questions are still being asked about the decision. The day after Lehman was left to fail the Treasury chose to bailout insurance giant AIG. More was going on at AIG than we were told and the questions posed today may address a certain level of criminality that should be investigated.

On March 24th I sent an Op-Ed piece to the New York Times regarding the potentially criminal transfer of monies from the taxpayers to AIG counterparties through TARP allocations. Below is the text of the Op-Ed. The original article, “The Real Crime at AIG,”  is posted on It’s Worth an Opinion.

*******************************************************

“The ‘Real’ Crime at AIG”

Is the outrage over the bonuses given out to executives at American International Group (AIG) masking the ‘real’ scandal at the world’s largest insurance corporation?

Read the rest of this entry »

Tags: , , , , , , , , ,
Posted in Banking, Economy, Markets, Too Big to Bail, Wall Street | 6 Comments »

“Five More Banks This Week”

by jim_worth Posted: Monday, 9/7/2009

Another Friday, another 5 banks taken over by the FDIC which brings the 2009 total to 89 banks. By many standards, not an exceptional week in the ongoing “Banking Crisis of Aught Nine.”

But, as in any crisis, there are a few things that bear watching so they don’t become a larger problem and surprise in the future. A reason to create a watch list beyond the FDIC’s.

Two more banks were closed in Illinois bringing the total to 15, second only to the state of Georgia with 18 this year. But even more disconcerting in “The Land of Lincoln” is the closure of Platinum Community Bank in Rolling Meadows. The FDIC will be mailing all depositors checks covering the total of their insured deposits on September 8th. Platinum was not turned over to another banking entity and the FDIC figures the closure will cost $114 million from the Federal Deposit Insurance Fund which is now down to around $10 billion.

Another development in this week’s closing was the take-over of Vantus Bank, in Sioux City Iowa. Vantus is the first bank in Iowa to close as a result of the current recession and the banking crisis. The last bank closed in Iowa was in January of 2000 which was caused by fraud.

As the crisis continues to unfold and our focus is narrowed to the smaller banks being seized by the FDIC we can’t lose sight of the ongoing plight of the BIG banks; the ones that taxpayers saved. There are still potentially huge problems at Bank of America and Citigroup that must be constantly scrutinized.

Despite the headlines of BofA’s profits for the first 2 quarters of 2009, American Banking News reports that BofA has actually lost $5.7 billion in the first 6 months of this year. The bulk of BofA’s profit in the first two quarters comes from two sources; the one-time gains from selling chunks of its business and the change in Mark to Market. When you take away what they paid out in dividends to investors the bank actually lost money.

So until we make it through a very tenuous time and have ‘real’ recovery it is important to watch the financial system carefully and pay attention to the changing economy.

Tags: , , , ,
Posted in FDIC Foreclosures | Comments Off

“September, the Beginning of the Fall!”

by jim_worth Posted: Tuesday, 9/1/2009

In September the landscape changes bringing with it hues of gold and red, orange and maize, as Summer moves on to Fall. Beautiful colors that remind us winter, and harsher weather is approaching.

To think that such exhilarating, breath-taking beauty could succumb to cold, wintry days is a stark reminder that ‘Nothing Gold Can Stay.’

And so it is with the markets. The Dow, S&P, and NASDAQ have languished all summer in hues of gold and green. But will September bring fall to the markets; turning gold into maize and greens into browns?

September is notoriously a bad month for stocks. After the sleepy, halcyon days of summer the month of September traditionally brings varying levels of negativism which historically has pulled the markets down.

There are many reasons to believe that the September tradition will continue this year and possibly move the markets downward through the end of the year.

Last year in early October, after a negative September, I issued a friendly challenge to a prominent member of the investment community. At the time the Dow was at 9,200 and he saw several signs of a bottom. I offered that we would be extremely lucky if the Dow remained above 7,000, predicted that unemployment would exceed 8%, and foreclosures in 2009 would exceed the record number of 2008.

All of my predictions were correct, even earlier than I had anticipated, which led me to immediately rethink the next level and in late February I readjusted my predictions. After the March 9th low I wrote an Op-Ed to the Wall Street Journal entitled, “The Dow at 6,000.”

There were many reasons for deeper pessimism when I sent the article on April 2nd despite the nearly month long rise in the markets. Those reasons linger and  have increased despite the five month rise in the markets.

Read the rest of this entry »

Tags: , , , , , , , , ,
Posted in Economy, Predictions, Uncategorized | 1 Comment »