Another One Goes Down

Greeley Report held off publishing yesterday because it had a source it was tracking on a story.  Last night the rumor became reality and Bank of Choice, the largest local bank in the area was seized by Federal regulators.  It was turned over to Bank Midwest (a Kansas-based group) and will reopen on Monday under their brand, hoping to show locals that it's actually "business as usual."  In reality it's not at all usual, and things behind the scenes in the entire banking community looks bleak.

When regulators seized New Frontier Bank in April, 2009 everyone that had money in the bank had to come in, close their accounts, withdraw their funds, and reopen new accounts in other banks.  However today, the Feds immediately transfer the closing bank's operations to a new bank.  Why have things changed in the past 2 years?

The superficial answer is that the government wants to help us continue on with life with as little trouble as possible, and that may be true.  However, the deeper issues lie within the FDIC (Federal Deposit Insurance Corporation).  You see, they are broke.  They don't have the funds to prop up banks.  More banks should be closing than ever before, but they don't have the money on hand to guarantee the bailouts.  So, they let these banks languish until they find a semi-healthy bank that will take on the failing bank.  Then they make the closure, ensure the transition, and everything is fine.  Right?  Wrong.

The Fed has mandated that every bank pay ahead on their FDIC insurance payments for a few years into the future.  (The Greeley Gazette has a good columnist that rants about this in his writing on a regular basis.)  So there should be more than enough money to insure our deposits.  Even with this payment ahead by several years, they are still broke...and they aren't telling you.  So, we see a "smooth transition" on the outside.  On the inside, the whole system is broke.  It has to work this way because the Federal Government cannot guarantee your deposits like you think they can.

To add to this problem, consider the number of bank failures and closures.  Today there are fewer banks paying into the FDIC.  There used to be more than 8,000 banks in the U.S., and that number is plummeting to less than half that amount.  It's a sick system, and it's not working.  No wonder they want us to stay calm.  Another bank closes today, and a new "branch" of a healthy one opens on Monday?  It's not as simple as it looks.  Life might look calm on the surface, but there is a great deal of uncertainty out there behind the scenes.

Comments

[Dennis]

BOATFLOAT,

The problem with liberals is their thinking. The problem with their thinking is pathological. The problem with that pathology is a definite psychosis that does not allow them to process logic. In spite of our jaw dropping disbelief that they cannot see what we see and understand, they continue to cling desperately to their imbecilic belief that more government is the answer to all of our problems, even when the facts clearly refute their beliefs. They will continue to convolute the truth to mold it to their perceptions.

Unbelievably, there are actually some people will vote for obama in 2012.

[BOATFLOAT]

FDIC can't afford to do their job properly, NASA can't afford to continue space missions, ICE can't afford to properly guard the border,National Weather Service would be bankrupt were it not for volunteers nationwide, foreclosures are killing us and the banking system, Social Security cannot keep paying its future obligations, Medicare is broke, Medicaid is broke and Obama wants to just keep going along spending money like it grows on trees. Something has got to give somewhere and if you raise taxes it will just break the system farther. Tax and spend lliberals I hope will begin to see the writing on the wall soon.