Bank Failure Friday: Only Half Of The Banks Seized Today By The FDIC Were In Georgia

Two in Georgia, One if Florida, and One in Arizona.

The AJC has the details of the Georgia failures:

The failures of McIntosh Commercial Bank of Carrollton and Unity National Bank of Cartersville bring Georgia’s total to 37 since August 2008, more than in any other state. Three banks failed last week.

McIntosh Commercial, which had assets of $363 million, was taken over by CharterBank of West Point. The failure is expected to cost the Federal Deposit Insurance Corp.’s insurance fund $123.3 million.

Unity National, with assets of $292 million, was taken over by Bank of the Ozarks in Little Rock. The failure is expected to cost the FDIC $67 million.

It ain’t over ’til it’s over, and it ain’t over yet.


  1. ByteMe says:

    And we haven’t even gotten to the problems with commercial paper yet. These bank failures are all about non-performing residential loans (not the sub-prime ones either)… and foreclosures are rising again.

  2. Gerald says:

    Can’t help thinking that the push towards an even more centralized money system benefits from this. Get rid of all the independent banks and institutions (which means credit unions are next!) so that the only thing left will be the federal reserve and the big banks, big government and big business, two entities that are joined at the hip despite that the posturers and poseurs on both sides of the aisle would have you believe.

    • ByteMe says:

      Unfortunately, the small banks did most of the damage to themselves by over-weighting their portfolio with property developer and residential mortgages.

      • Gerald says:

        Funny how this was never a problem for small banks in the past. Small banks have been forced out by corporate mergers (completely ignoring our anti-trust laws) and regulatory changes. Leave them with choosing between the risky business and no business at all, which are they going to choose? At least the risky deals give them a chance at survival. And why did the bank bailout money go to the big banks who created the negative market conditions for the small banks in the first place, instead of to the small banks also? The big banks are “too big to fail” no matter what they do, and the small banks are basically forced to fail by a combination of conditions that the government and big banks have a lot of control over so they can’t serve as an alternative to the big banks to matter what the big banks do. Classic racket which would be illegal if the government wasn’t in on it.

        And of course, down the line when the only banks left are the big ones protected by the government, the only people and projects that will get credit will be the ones that the government have no problem with. So, if a development project runs afoul of the “sprawl/smart growth” advocates, well they won’t be able to get a line of credit. Small price for the big banks to pay for government protection from competition, market conditions, and their own incompetence. Face it, we have moved away from a free market economy to one where the government protects certain corporations and industries. The best (worst) part is that both political parties support it because both benefit. What the energy companies were to the GOP in the last decade, the insurance companies, auto companies and banks who fall in line will be for the Democrats in this decade.

        • benevolus says:

          I don’t think you can draw a conclusion like that based on Democrat’s response to a situation they inherited. Dem’s aren’t anti-business, but Dems have been advocates of increased regulation for a long time, with some notable exceptions, of course (ahem, Chris Dodd, Joe Biden).

          Bailing out the big companies instead of the little companies isn’t a philosophical choice, it is a practical choice. It’s unfortunate, but circumstances can be demanding, and sometimes there just are no good choices. Obama is proposing new regulations even today (with Sarkozy) for banking.

          Politics ain’t perfect and neither are politicians, but sometimes they do try to do the right thing and work for the best outcome for the most possible people.

  3. Dave Bearse says:

    Stayed tuned to for the next announcment of a Georgia bank failure in two weeks—that’s been the going interval for going on two years now.

    Any bank too big to fail ought to be dismantled.

    • ByteMe says:

      You haven’t been watching all the asset sales going on at AIG and Citi. LOTS of asset sales going on there. The ones that needed the most cash are indeed being dismantled.

  4. Bill Greene says:

    Charlicarus ain’t gonna like my comments, but oh well.

    With Georgia leading the nation in bank failures, the banking industry desperately needs new ways of bringing in business, customers, and MONEY. More than three out of five Georgia banks were unprofitable in 2009, over twice the national average.

    The Georgia legislature had a chance to pass a great bill this session, introduced by Sen. David Shafer and co-sponsored by over 25% of the Senate Banking and Financial Institutions Committee, that could have literally SAVED the banking industry in Georgia. Entitled the Sound Money in Banking Act, it would require any bank serving as a depository for the state to offer and accept legal tender gold and silver coins for separate deposit accounts, in addition to Federal Reserve Notes.

    It sounds pretty simple, so how could it save the banking industry here?

    If banks in Georgia are directed to allow their customers to establish gold and silver accounts, there will be a HUGE influx of customers not only from across Georgia, but from across the nation; this is the Georgia banking industry’s best opportunity to attract the record-breaking legal tender silver and gold coin business, now at over 30 million Silver Eagles and nearly 2 million Gold Eagles per year. That would be an increased reserve of over $2.2 BILLION in value in Georgia’s banks — and NO other state is offering this service in its banks.

    Despite the fact that Committee Chairman Bill Hamrick received hundreds of messages, phone calls, letters, emails, etc. – including from bank executives – asking him to just bring the dang bill up for a vote, he refused before the Friday crossover-day deadline. Reports were it was because a couple of BIG names from the banking lobby insisted this bill die, because “it would change the way we do business.”

    And, ironically but fittingly, half of the banks seized by the FDIC on that same day were in Georgia. Isn’t it TIME for them to change the way they do business???

    • Harry says:

      I predict some of these RINOs may get a rude awakening in November. Hamrick may think he’s in a safe district over in Carrollton, but just enough of the base may decide to stay home on election day. When these folks like Rep. Millar and Sen. Hamrick carry the water for noncompetitive hospitals and banks at the expense of the taxpayer/consumer, in the day of internet people can be “reminded” of some of these pesky little facts just before the election, not by me but by the opposition.

      Just look at what they’re trying to do to kill Romney right now, who just happens to be the most viable Republican for 2012. They’re using disinformation about Romneycare in Massachusetts to nip him in the bud, even though Romneycare is a much simpler and limited program in a wealthy and less diverse state, compared to what Obamacare is going to do to the entire nation.

    • ByteMe says:

      And, ironically but fittingly, half of the banks seized by the FDIC on that same day were in Georgia. Isn’t it TIME for them to change the way they do business???

      And none in North Carolina or South Carolina. Do they take Gold? How about ANY of the other 46 states that didn’t have closings on Friday?

      It’s a stupid idea, Bill. Just because there’s the “potential” for an influx of gold, doesn’t mean there would be an influx. Why would I want to give my gold to a small bank in the middle of Nowhere, Georgia, if it’s NOT going to be insured in case the bank gave out TEN TIMES their cash balances to housing developers who went bankrupt?

      Just a stupid idea.

      • Bill Greene says:

        BTW – it’s not like it isn’t being tried successfully in one form or another elsewhere.

        Indian bank’s gold deposit scheme ‘seeing success’
        Tuesday, 23rd March 2010

        A scheme launched by the State Bank of India (SBI) last year to encourage customers to deposit gold and earn interest on it has been a success, new figures have suggested.

        Some 3,650 kg of gold has been deposited with the SBI since March 2009, according to statistics reported by the Financial Express.

        The service sees customers deposit a minimum amount of gold with the SBI, which then melts it down and converts into pure gold bars.

        Varying rates of interest are paid depending on how long the customer deposits their gold for.

        According to the SBI, the scheme has proved particularly popular in the state of Gujarat, where 800 kg of gold has been deposited since it was launched.

        “This scheme is aimed at utilising the gold deposits lying unused in the lockers of big trusts and individual customers,” a senior official at the SBI, which could expand the initiative to more Indian locations, said.

        The SBI began selling gold coins in 2007 and expanded the offering to include more of its branches across the country last year.

      • ByteMe says:

        So the best you have to support your so-called argument is India?? Borderline insane. I expect nothing less at this point.

        Try this: the FDIC insures accounts on a dollar-for-dollar basis up to a certain amount. Gold is not dollars and has a variable value based on the world gold market. Banks use their deposits to determine the amount they can loan out. By changing the rules to allow gold to be used in the same way, they do indeed increase their asset base. However, if they make loans based on the value of gold today and the value falls precipitously — as happens with any global commodity market, and even the housing market that no one thought could ever go down a lot — they suddenly find themselves in deep trouble and we’re right back where we started.

        In other words, gold is not dollars and has a variable value that does not always increase, so it’s as useful as saying “hey, banks, go ahead and leverage yourselves up based on the value of your own stock.” Which they can’t do for a very good reason.

        But I don’t expect you to understand or agree. 🙄

        • Bill Greene says:

          So the best you have to support your so-called argument is India? Borderline insane.

          How very racist of you. Take a drink.

          Are you seriously contending that banks can’t hold gold and silver deposits? As if that’s never happened in the history of the world, or even the U.S.A.?

          Gold is, indeed, not “dollars” in the sense of fiat Federal Reserve Note “dollars”. However, gold coins — specifically, legal tender gold American Eagles, which is what SB 416 is referring to (along with legal tender silver American Eagles), ARE dollars — specifically, each 1-oz. gold coin has a face value of $50. (1/2 oz. is $20, 1/4 oz. is $10, 1/10 oz. is $5. 1-oz. silver coins have $1 face value.) So, gold coins have a fixed face value, which, as you would expect, fluctuates in relation to other currencies on a daily basis, just as FRNs do. Those are all called exchange rates, BM, and it’s how everybody (except you, apparently) determines the value of any given currency on any given day.

          And your whole rant on “Banks use their deposits to determine the amount they can loan out” is exactly the problem here (besides using fiat money nearly worth only their ink and paper) – fractional (or, in reality, fictional) reserve banking has contributed to the DESTRUCTION of the American economy, and the sooner we get to using real money that holds its value over time, the sooner we can get out of the current depression and break the boom and bust cycles caused by the Federal Reserve.

          • ByteMe says:

            And your whole rant on “Banks use their deposits to determine the amount they can loan out” is exactly the problem here (besides using fiat money nearly worth only their ink and paper) – fractional (or, in reality, fictional) reserve banking has contributed to the DESTRUCTION of the American economy….

            All I can say is, THANK GOD you are not in charge of operating heavy machinery. Or anything to do with the operation of the economy on anything other than the scale of “I’d like fries with that.”

          • Icarus says:

            To be clear here Bill,

            David Shafer has introduced a bill that would not allow banks to engage in fractional reserve lending on their “sound money” deposits, correct?

          • Bill Greene says:

            Yeah… great intellectual point-by-point response, BM. I’ll bet you’re scared of zombies, vampires, global warming, and the fact that I teach American Government and Macroeconomics on a regular basis. The future is in the hands of the likes of ME…

            ByteMe. MUAHAHAHAHAhahahaha…

        • benevolus says:

          This is interesting.
          Make banks take gold.
          India is the example but they melt down their gold whereas presumably we would not because it is currency.
          What happens to the gold? Do banks send it to the Fed in exchange for paper currency? Does that mean that eventually the Fed can control the price of gold by how much (or little) they send into the open market?
          Or, if the local banks keep it, what do they do with it? What purpose does it serve?

  5. Harry says:

    And you think Federal Reserve notes have any intrinsic value? C’mon. The only possible possible way to move from governmental tyranny is to move back onto the gold-silver basis of exchange. It will happen with or without the acquiescence of the political class.

    There is one big problem with the Indian method: it encourages people to trust the government (state bank) with their hoardings. I wouldn’t trust any government – Indian or American. They can decide by fiat to transfer the gold holdings to Rupee overnight, and the Rupee exchange rate is fixed, it’s not even a floating currency.

    • ByteMe says:

      If you think your dollars don’t have intrinsic value, I’ll take them off your hands and dispose of them properly for you. 😆

      • ByteMe says:

        So they have value. And they have floating value relative to commodities like gold, silver, and aluminum. That doesn’t make them assets that the FDIC should insure and protect in the event the bank goes under nor should it be counted as anything different than an investment in the stock market for purposes of determining bank debt ratios.

        • Harry says:

          We can agree that there’s no need for an FDIC guarantee. The banks will be happy not to pay FDIC insurance on these deposits, which instead could be insured by private insurance carriers.

            • Bill Greene says:

              Who’s this “we”?

              You and Harry, it appears.

              Oh, and me. Who would WANT their real money insured by a bankrupt “insurance company” that only insures pieces of paper which have already lost over 95% of their value? I can insure gold and silver bullion in my own home right now, through my homeowners insurance. I have no doubt that private insurers will be more than happy to get into the business of insuring banks which offer gold and silver legal tender coin accounts when they become available.

              Tell you what, Harry — I’ll trade you: I’ll give you 100 $1-face-value legal tender Federal Reserve Notes, which you claim have intrinsic value, and you give me 100 $1-face-value legal tender Silver Eagles in return, which actually DO have intrinsic value. I’ll be glad to get the FRNs off my hands, and I’ll be even more glad to take those nasty old coins off of YOUR hands. Hmmmm?

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