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Martin here with an urgent update on the next phase of the banking crisis.
Just this past Friday, the government released new data showing that the FDIC’s list of “problem banks” now includes 903 institutions.
That’s ten times the number of bad banks on the FDIC’s list just two years ago.
The banks on the list have $419.6 billion in assets, or SIXTEEN times the amount of two years ago.
And yet, these bad banks are …
Just the Tip of the Iceberg!
How do we know?
Because the FDIC has consistently neglected to include the most endangered species on its list of problem institutions — the nation’s megabanks that are among the shakiest of all.
The FDIC doesn’t reveal the names of the banks on its list — just the number of institutions and the sum total of their assets.
Still, I can prove, without a shadow of doubt, that the FDIC’s list of problem banks is grossly understated and inadequate.
Consider what happened on September 25, 2008, for example.
That’s the day Washington Mutual filed for bankruptcy with total assets of $328 billion.
But just 30 days earlier, according to the FDIC’s own press release, the aggregate assets held by the 117 banks on its “problem list” were only $78 billion.
In other words …
Washington Mutual alone had over FOUR times the sum of ALL the assets of ALL the banks on the FDIC’s list of problem banks!
Obviously, Washington Mutual was not on the FDIC’s list.
Obviously, the FDIC missed it. Completely.
Also not on the FDIC’s list: Citicorp and Bank of America, saved from bankruptcy with $95 billion in bailout funds from Congress. Just these two banks alone had over FORTY-SEVEN times more assets than all of those the FDIC had identified as “problem banks.”
Some people in the banking industry seem to think the FDIC can be excused for missing the nation’s largest bank failures for the same reason that blind men groping in the dark can’t be blamed for missing an elephant in the room.
But the fact is that the FDIC even missed the failure of a relatively smaller bank: IndyMac Bank.
When IndyMac failed in July 2008, the 90 banks on FDIC’s “problem list” had aggregate assets of $26.3 billion. But IndyMac alone had $32 billion in assets. Evidently, even IndyMac was not on the FDIC’s radar screen.
This is …
Easily One of the Greatest
Financial Scandals of Our Time
The FDIC’s problem list is supposed to guide banking authorities in their efforts to protect the public from bank failures. If the FDIC is missing all the big failures, where does that leave you and me?
Heck — it’s bad enough that they refuse to disclose the names of endangered banks. What’s worse is that they’re hiding the truth from their own eyes.
And with so many misses so evident, you’d think they would have changed their ways by now.
Not so.
Even as I write these words to you this morning, banking authorities are AGAIN failing to recognize, analyze, scrutinize, or tell the public about the real impact of the most intractable disaster of this era:
Major U.S. Banks Still Extremely
Vulnerable to the Foreclosure Crisis
Here are the facts …
Fact #1. JPMorgan Chase, Wells Fargo Bank, and Bank of America each have more than $20 billion in single-family mortgages that are currently foreclosed or in the process of foreclosure.
Fact #2. Each bank has at least DOUBLE that amount in a pipeline of foreclosures in the making — $43 billion to $55 billion in delinquent mortgages (past due by 30 days or more).
Naturally, not all of the past-due loans will ultimately go into foreclosure. But these figures tell us that the biggest players are not only in deep, but could sink even deeper into the mortgage mayhem.
Fact #3. Combining the foreclosures and delinquent mortgages into a single category — “bad mortgages” — the sheer volume still on their books is staggering:
- JPMorgan Chase (OH) has $65 billion in bad mortgages …
- Wells Fargo Bank (SD) has $68.6 billion, and …
- Bank of America (NC) has $74.9 billion.
Fact #4. The potential impact of these bad mortgages on the bank’s earnings, capital — AND SOLVENCY — is dramatic. Compared to their “Tier 1” capital …
- SunTrust (GA) has 57.6 percent in bad mortgages …
- Bank of America has 66 percent in bad mortgages …
- JPMorgan Chase has 66.8 percent, and …
- Wells Fargo has 75.4 percent.
Tier 1 capital does not include their loan loss reserves. But even if you included them, the exposure is still huge.
Moreover, this data is based on the banks’ midyear reports. Since then, we believe the situation has gotten worse.
And these numbers reflect strictly bad home mortgages! It does not include bad commercial mortgages, credit cards, construction loans, business loans, and more.
Here’s the key: Based on their size alone, we KNOW that none of these giant institutions are on the FDIC’s list of “problem banks.”
Yet they are all definitely WEAK, according to our Weiss Ratings subsidiary, the source of this analysis on bad mortgages.
Moreover, “weak” means “VULNERABLE,” according to the analysis of the Weiss ratings provided by the U.S. Government Accountability Office.
To help make sure your money is safe, I have four recommendations:
Recommendation #1. Don’t keep 100 percent of your savings in banks. Also seriously consider Treasury bills — bought through a Treasury-only money market fund or directly from the Treasury Department.
Don’t be put off by their low yield. The primary goal of this portion of your portfolio should not be the return on your money. It’s the return OF your money.
Recommendation #2. The only real risk in holding U.S. Treasury bills is the likelihood of a falling U.S. dollar. But don’t let that alone prompt you to run away from safe investments and rush into high-risk investments. Instead, stick with safety and protect yourself from a dollar decline SEPARATELY, with hedges against inflation, such as gold.
Recommendation #3. For checking accounts, money market accounts, and CDs that you have in a bank, be sure to keep your principal and accrued interest under the FDIC’s insurance limit of $250,000.
Recommendation #4. Given the magnitude of the potential crisis … given the limited resources of the FDIC … and in light of the strong anti-bailout sentiment of the new Congressional leadership … I feel you must not count exclusively on the FDIC or any government entity to guarantee your savings.
Instead, make sure you do business strictly with financial institutions that have what it takes to withstand adverse conditions on their own, even without a penny of government support.
Do your best to avoid banks with a Weiss rating of D+ (weak) or lower and seek to do business with banks that we rate B+ (good) or higher. Stay safe.
Good luck and God bless!
Martin
{ 39 comments }
So where’s the list of the B+ or higher banks?
Where can I get the Weiss Bank ratings?
Please send me the list of safe banks. Jill~
Please send lists of banks.
Thank you.
Where is the list of banks?
So – where is the list of banks?
Please send me a list of B+ rated banks and the worse rated ones. Thank you very much
How do I get the Weiss Bank Ratings? Thank you!
How can I know what the Weiss ratings are. . . (D+ = weak ) so I can avoid this bank?
How do I get the Weiss Bank Ratings?
Thank you,
Mike Siwierka
How do I get the Weiss Bank Ratings
Where is your lastest update on problem banks. Thanks Nora
I have had the list before and want to see the new one. Thank you
A message worth sharing to a citizen base that has set aside its’ responsibility to govern its” self and focused on what it can get from a government that has nothing to give. Welfare and “entitlements” has displaced responsible behavior and fiduciary responsibility. As a retired banker I can say that regulation is not what makes banks safe but rather attitude and policy that focuses on serving your clients with responsible financial management and high quality service. The return to the bank are clients who return the favor with greater business and more clients. Safety and prosperity are the rewards. cahr
I am interested in ETFs of foreign nations.
http://www.thestreet.com/bank-safety/
Does Weiss ever rate Canadian banks?
Canada`s boss in banks came from goldman sacks.
Can the taxpayer trust guys like that.
Political people are terrific liars and I seldom take their assurance that all is ship shape.
How can I get the Weiss Bank ratings?
What do you mean “waiting Moderation”?
i believe the list of banks is at thestreet.com
http://www.thestreet.com/bank-safety/
there ya go…
http://www.weissratings.com/sw/?m=s&t=BANK
Why is it so hard to get the weak bank report. It was promised when I signed up for this service, and I didn’t receive it. I found one link to it, but needed a password. Now that I have a password, the link is gone. What do I need to do to get a copy of the bad bank report???
Mr. Weiss,
Do you recommend taking a position in an inverse ETF on the financial sector, such as SEF or the leveraged inverse ETF SKF?
Thanks
Dear Weiss, Please send me your list of B+ Weiss rated banks as soon as possible. Before the Dinar RI which is imminent!
Thank you very much.
In Jesus’ amazing love,
L Lewis
SO??? who is going to answer these questions and when???
NOT ONCE DOES ANYONE MENTION TO ALL THIS DEBT IN THE WORLD AND BANK FAILURES AND BANKRUPTCIES….TO WHO ALL THIS IS OWED TO?
ZERO SUM GAME!
WHO ARE THE ELITE THAT ARE PROFITING…NAME THEM WHO ARE BEHIND THE GREED.
THEY WONT DO IT BECAUSE NOBODY HAS THE GUTS TO!
you’re absolutely right, and no one in the main stream has the guts to talk about the real reason of all this mess: FRACTIONAL RESERVE BANKING/USURY, DEBT BASED MONEY CREATED OUT OF NOTHING!
That the Federal Reserve Act of 1913 effectively bankrupted the United States by handing over the legal authority to create money to the Federal Reserve, a private corporation unaccountable to anyone.
Think about this: if all the debts in the world were paid off, there would be no money! The system is designed to be in perpetual debt, that’s why they have to keep printing more money. The biggest ponzi scheme ever! Goog “Money Masters”, “Money as Debt”.
Please send me a list of the B+ rated Banks and the D- or worse ASAP, Thanks so much, God Bless, Doug
I would like an up dated of the failing banks. Thank you very much.
It’s nice to see a comment section now, it’s something I and I’m sure plenty of others suggested to Dr. Weiss. But don’t expect many answers.
Please let me know how can I and others receive the list of safe (B+) and unsafe banks, and what about credit unions?
Thank you very much,
Brad
My Credit Union offers just about all things financial that the big banks do. So I wonder if some Credit Unions are as risky as the banks. Are CU’s rated? It seems that answers here are sparse to non-existant, so I’m not hanging by my thumbs.
I need the same reply as Edward above. Abour CU. and ratings, my wife has accounts in american airlines.
are credit unions safe?
I have funds with a local credit union–Bay Federal. Have you rated this financial institution, or CU’s in general? Would you please send me a list of banks with (your) rating of B+ or better.
Thank you.
I like your site, Dr Weiss.
Question:
What is the stability situation for credit unions? In particular, NAVY FEDERAL CREDIT UNION, and, ANDREWS FEDERAL CREDIT UNION.
Thank you in advance,
John
Hi Martin,
Thanks for all your very informative info. 2 Quick questions.
1. We have our mortgage with Wells Fargo Bank. We just refinanced for a 30yr mortgage @ 4.75%. If Wells Fargo got into trouble how would that affect our 30 yr fixed mortgage?
2. We have $ in two banks. http://www.mcfcu.org and
Lafayette Ambassador Bank Newburg Branch, Lower Nazareth Township …
which is owned by Fulton Financial.
I am a subscriber and did receive the Weiss White Pages list of banks and ratings – but my banks were not listed. I did call your office and they gave me a number to call but that did not materialize into anything.
Your insight into these 2 banks and holding a mortgage with Wells Fargo would be much appreciated.
Thanks.
I am am mortgage banker, soon to be was if things don’t turn around quickly! I have gone from 6 figure income in 2006 to less than 10k in 2010 and not from the lack of trying, however putting my current predicament aside and getting to my thoughts.
If banks are still failing at an alarming rate with no chance of another bail out from the FEDS, thank god!
What if the government stopped making worthless laws with loop holes and actually helped its people? All of the recent financial laws are stupid and did nothing in the way of helping the customers. Since now it just cost them more money up front to close on a loan and gave more idiotic hoops for them to jump through. We had already taken way the dream of home ownership once the government allowed the banks and credit companies to jack up credit card rates to 25% and lower your credit line to 100.00 over what you owe on anyone no matter if you had been late or not on your payments. This practice au course dropped peoples credit scores like a rock knocking out most of the possible risky home owners. However it also locked them into a soon to come foreclosure path since they no longer qualified for a refinance loan or cash out loan that might have kept them from defaulting on their Mortgage and or Credit card debts. But it did not stop their we over hauled the credit scoring system, made bankruptcies laws more stringent, and raised the minimum credit score on all products to 640. All while groceries, utilities, gas, medical, insurance, property taxes are at an all time high. During the past 4 years our government did very little to stop anything because they are to busy pointing fingers at each other worrying about their own self interest and pet projects to do anything with any real meaning.
Know I know it is easy to sit back on the side lines and point finger without trying to come up with possible ideas of which people much smarter then I can build from.
Fist they can stop foreclosures entirely. Have the FDIC take over banks not sell them to banks already to big to fail in the first place. But make them Federal Fund lending centers direct to the public. (Why provide all this money to bail out people and put so many guideline that it helps less than 25% of the people you intend to help?( unless you are just giving lip service!) Give low interest loans to the people through FHA and VA directly no outside banks involved. They can provide short to long term loans at 2% above rates currently being received by banks. These loans should be set up with auto payment draft from employer along with direct deposit checking and savings. Make the mortgage tied to checking account the more they have in checking and savings the more discount they receive on mortgage interest rate. This will bring more deposits to the FDIC banks than any little interest currently paid out on checking and savings accounts. (Just think no big headed executive stealing tax dollars for bonuses! ) How many people would that keep in their homes? Secondly use HUD to manage the properties that have been foreclosed on by renting them out to individual families or make them Group Homes. ( No free hand outs. Any assistance given is taken back in community services saving the states money and putting people back to work. Social responsible community programs can work and people want to work. But if your largest tax base is shrinking to poverty level and homes are sitting empty, how do you expect to get out of this recession? You can’t borrow your way out it. You need Jobs and Homes for your people. To do that you must balance trade agreements.
The way I see it banks currently have the upper hand on the government because they know if they don’t like something they can just freeze up the economy like they did last time ” Credit Crunch” Since we no longer have a free market accept for the top 10% of Americans. What difference does it make to the rest of us if we have