Banks Have Us Flying Blind on Depth of Losses
There was a stunning omission from the governmentís latest list of ďproblemĒ banks, which ran to 416 lenders, a 15-year high, as of June 30.One outfit not on the list was Georgian Bank, the second-largest Atlanta-based bank, which supposedly had plenty of capital.
It failed last week. Georgianís clean-up will be unusually costly. How many other seemingly healthy multibillion-dollar community banks are out there waiting to implode?
As for the 416 banks on the list as of June 30, up from 305 a quarter earlier, the FDIC said their combined assets were $299.8 billion. If Georgianís experience is any guide, the real-world value of those assets probably is much less. That might help explain why the FDIC keeps increasing its estimates for the losses itís anticipating from future bank failures -Jonathan Weil/Bloomberg
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