Bank "Problems" And Naming Names: Your Emails

I received a lot of email regarding my reporting/blogging surrounding the failure of IndyMac.

Many of you wrote asking where you could find the names of the 90 potentially problematic banks the FDIC keeps on a list. The FDIC doesn't provide the names of the banks, only the total number of institutions it's keeping an eye on. Believe me, if I knew the names, I'd print them all. But that's the reporter in me.

Quite of few of you don't agree with that sort of reporting.

Nancy D. writes: "There are federal laws against publishing materials that constitute an incitement to runs on banks that are FDIC insured. The article you've written very clearly has this ability. If runs immediately occur on the specific banks you've suggested as being in the 'danger zone,' and those banks fail as a result, then you and CNBC are likely to be subject to numerous lawsuits."

Mark B. compares me to Sen. Chuck Schumer, who publicly expressed concerns about IndyMac and is being blamed (by some) for its demise:
"Are you trying to repeat Schumer's mistake? I can't believe you actually named banks, and pointed out the FDIC could run out of funds in the same article! Are you trying to start a run on all banks? I am completely dumbfounded!! Completely!"

Speaking of Sen. Schumer, John M. says the next bank to fail will be whichever one Schumer writes about in a public letter. "Yes, IndyMac had severe problems, but good old dumb Chucky started the run with that letter of his. Single-handed he did. Most effective, though disastrous, thing he has done since getting to the Senate. So now will he look to bail out the $500M of deposits that were outside the scope of FDIC insurance?"

Most emails actually wanted more information than I provided, especially more from Ladenburg Thalmann's analysis by Richard Bove of the few banks potentially in "the danger zone."

Steve V. writes:
"Dick is right…regulators and politicians are useless. The problem is neither understands what they are doing or what is going on. It is a sad day that incompetence and stupidity rise to such a level. Then they are critical of Chuck Schumer who has the courage to standup and say what he believes (re: IndyMac). Probably the most visible regulator with the least ability to understand what he and his agency are doing is Chris Cox (head of the SEC). He has to take the top prize for being incompetent. He missed the problems at Bear Stearns, structured products and real estate, and insists that his move to eliminate the 'uptick' rule was smart."

Eric G. is debating whether to pull his deposits from his bank, Downey Financial, even as Downey announced this week it has enough money to meet its obligations:
"The FDIC seems to only have $53 billion and IndyMac will cost between $4-8 billion. If other banks and financial institutions continue to fail, it's only going to take another 8 institutions to fail (at $6 billion each) before the FDIC is bankrupt itself! Then what?? Doesn't this prove that the whole banking system is a big pyramid scheme?"

David B. writes:
"I like Bove, but he should put the blame where it belongs: Financial institution management, Congress who pushed lenders to give loans to those who didn't have the means or marketable skills to pay them off, greedy developers, local governments who were turning out building permits beyond rationality in order to beef up the tax base, and those who made bad bets...As a semi-retired ex-FDIC consultant, I can tell you that some of the biggest banks in America were on our hit list in 1987. The biggest problems that we had: We lacked enough skilled people to close the banks. I imagine they are faced with the same problem today."

Alex. B.--who discloses he's long on Corus--has an interesting take on Bove's math now that the U.S. Government has basically promised to keep Fannie and Freddie solvent:
"I think Richard Bove's numbers on Corus Bank are incorrect. From my reading of their latest 10Q, the percentage of non-performing loans over total loans is approximately 9.3%, not 13.2% - it's clearly stated on page 29 of the 10Q. Furthermore, half their assets are tied up in very safe short-term securities - they hold a lot of Freddie & Fannie debt, which is now explicitly guaranteed by the federal government (as of this weekend!). Technically these are loans - but they're loans guaranteed to be repaid. So their real number comes out to be below 5% by my calculations."

Jeevan G. perhaps provided the most depressing email of all:
"It's funny that no one is watching the really vulnerable banks and nobody is watching the 'watchers'. So in the end, the net result is, let the guys who want to rob the people do their job. Then when all damage is done, show that you are cleaning up the system. Then leave half way, so that the next batch of smarties comes along, uses the loopholes 'intentionally' left in the revamped laws and make more. Then the same cycle keeps going..."

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