Update The FDIC's insurance fund, which guards $6.2 trillion in U.S. deposits, fell to $10.4 billion at the quarter's end, the lowest since mid-1993.

Update Proof The FDIC Is Broke Here.

I am sure by now you have all heard of the "Bank Holiday's" being planned by our foreign embassies. Now comes this very disturbing news (HT The Market Ticker)...

One Of Three Down; Is The FDIC Still Solvent?

Here we go!

Colonial, Alabama’s second-largest bank, is being closed by regulators today, the person said, becoming the largest U.S. bank failure of 2009 after an expansion into Florida saddled the lender with more than $1.7 billion in soured real-estate loans.

The FDIC usually waits until the close of business Friday; they must have had a slight problem with withdrawals......

Left unsaid is what's going to happen to the FDIC deposit insurance fund on this one - my guess is that it will be ugly, as these guys were up to their necks in Florida on development projects that went bad. The "value" of that paper may be very close to zero; if the FDIC avoids doing one of their 40% loss deals I will be quite surprised.

A 40% loss on this one would, if my math is right, kill the rest of their insurance fund plus quite a bit and put the FDIC in the position of immediately needing to go hit up Treasury for more money.

That ought to be good for confidence, right?

Oh, there are two more on the "you're dead" list that I've been talking about for a while: CORUS and Guaranty, both of which have said they (as of last filing) have a negative Tier Capital Ratio, meaning that they are formally underwater and IMHO should have been seized months ago.

But don't worry, Treasury has an infinite credit card to keep funding the FDIC with, right?

"Heh Mr. Chinaman, can you spare an extra trillion - or three?"

There is also this to consider...(Hat Tip Economic Policy Journal)

Does David Rubenstein Own Elizabeth Warren?

Carlyle Group's Davis Rubenstein wants to gobble up smaller banks from around the country.

Lately, Elizabeth Warren has been running around the country talking to anyone who will listen and telling them that small banks are under capitalized and need a cumulative additional $12 to $14 billion.

Guess who wants to supply that amount (with the help of government financing)?

The recent report by Warren's Oversight Committee also includes the $12 to $14 billion number.

So direct from the horses mouth Warren has said small banks are under capitalized and according to Bloomberg...

Check out the footnotes to Regions Financial Corp.’s latest quarterly report, and you’ll see a remarkable disclosure. There, in an easy-to-read chart, the company divulged that the loans on its books as of June 30 were worth $22.8 billion less than what its balance sheet said. The Birmingham, Alabama-based bank’s shareholder equity, by comparison, was just $18.7 billion.

So, if it weren’t for the inflated loan values, Regions’ equity would be less than zero. Meanwhile, the government continues to classify Regions as “well capitalized.”

How many more banks will the FDIC take over today it is FDIC take over Friday? In addition wow also from Bloomberg today...

Toxic Loans Topping 5% May Push 150 Banks to Point of No Return

I cannot tell you if there will or will not be a run on the banks on Monday I can tell you America is broke and the Banks and our Government is and has been lying to you about the state of our economic affairs. BO wants to make sure the truth does not come out! It is always better to be safe than sorry in case the FDIC is really broke and they decide to take a Bank Holiday if your bank is open this evening or tomorrow take out a little cash to tide you over and think about the disaster that is unfolding when you consider the massive spending and pork being done by this administration and congress.

Update!

Colonial BancGroup becomes biggest bank failure of 2009

BB&T takes over after FDIC shuts Alabama lender at cost of $2.8 billion

Update 2!

Regulators also closed four other banks: Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Ariz.; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, located in Pittsburgh.

HUGE UPDATE...

(Comment mine) NEVER SAY NEVER THE FDIC IS BROKE, BO IS SPENDING LIKE A DERANGED SOCIALIST WITHOUT A POT TO PEE IN AND CHINA IS SICK OF LENDING US MONEY AND HAVE TOLD HIM SO AGAIN AND AGAIN.

Check this out posted today (8/15/09) at The Market Ticker

Oh now Judicial Watch has gone and done it:

Remember that we were told when AIG (and the banks) were bailed out that "the taxpayer is unlikely to lose any money, and may even make a profit." Bernanke said this, Hank Paulson of Treasury said this, indeed, it was the mantra of the administration.

It was also untrue:

The prospects of recovery of capital and a return on the equity investment to the taxpayer ARE HIGHLY SPECULATIVE.

Crossed out by hand. The final presentation of this to The American People was missing this key disclosure.

The FDIC has repeatedly stressed that "nobody has ever lost a penny of insured deposits", to wit:

Finally, Mr. Evans' suggestion that the "government" could ever be "on the hook for uninsured deposits" demonstrates a misunderstanding of FDIC insurance. To protect taxpayers, we are required to follow the "least cost" resolution, which means that uninsured depositors are paid in full only if this is the least costly option for the FDIC. This usually occurs when a bidder for the failed bank is willing to pay a higher price for the entire deposit franchise. We are authorized to deviate from the "least cost" resolution only where a so-called "systemic risk" exception is made. This is an extraordinary procedure which we have never invoked. And again, any money we borrow from the Treasury Department must be repaid through industry assessments.
I am confident in the strength of the FDIC's resources to make good on our sacred pledge to insured depositors. And, remember, no depositor has ever lost a penny of insured deposits, and never will.

Oh Oh Guaranty Financial!

http://www.ft.com/cms/s/0/35f0b010-8a9a-11de-ad08-00144feabdc0.html

http://market-ticker.denninger.net/archives/1336-Treasury,-FDIC-And-More-How-Many-Lies.html

http://www.marketwatch.com/story/colonial-may-become-biggest-bank-failure-of-2009-2009-08-14