By The Tim on September 15th, 2009 at 10:30 AM · 47 Comments
Interesting follow-up to Friday’s failure of Venture Bank via the Tacoma News Tribune: Some banks in state risk failure
The best news to derive from Friday’s announced failure and sale of DuPont-based Venture Bank came in the form of a report from a Seattle TV and radio station.
But the news – that no other banks in Washington were in trouble and facing closure – was very wrong.
I believe that the remark above is referring to this report from KOMO news, which contained the (false) claim that “as of right now, there are no other banks in financial trouble in the state.”
Yes, Venture did fail.
But yes again, in fact, there are other banks in the state that might also fail.
Scott Jarvis, director of the state Department of Financial Institutions, said Monday that he thinks he knows how that incorrect information was relayed to the public.
“The consumer reporter called Brad,” Jarvis said. (That would be Brad Williamson, head of banks at DFI.)
The reporter asked if any other banks were in trouble. Williamson – on Friday evening – answered, “We are not closing any more banks this week.”
“Somehow that got translated for the 11 o’clock news that there are no other banks in trouble,” Jarvis said.
“The truth is that we did not close any more banks on Friday,” he said.
And he continued, “There is considerable strain on our banking system attributable to the expansion we had in commercial real estate growth.”
With Ben Bernanke out there claiming that “the recession is very likely over,” it will be interesting to see how many more local banks continue to fail under the continued financial stress of non-performing construction loans.
(C.R. Roberts, Tacoma News Tribune, 09.15.2009)
Categories: News
Tags: banks, KOMO, lending, Local Economy, Tacoma_Tribune, Venture
By The Tim on September 11th, 2009 at 6:00 AM · 54 Comments
I posted about this earlier this week on the official Seattle Bubble Twitter account, but I thought it would be worth a post of its own. Via The New York Times: Construction Loans Falter, a Bad Omen for Banks
Even as the economy may be starting to recover, banks across the country are confronting a worsening outlook for their construction loans, an area that boomed for much of the decade.
Reports filed by banks with the Federal Deposit Insurance Corporation indicate that at the end of June about one-sixth of all construction loans were in trouble. With more than half a trillion dollars in such loans outstanding, that represents a source of major losses for banks.
…
Foresight’s estimates of the proportion of problem construction loans in the 20 largest metropolitan areas has one surprise: the one with the largest proportion of troubled loans is Seattle, where the recession has started to pinch.
According to the graphic attached to the story, over 30% of construction loans in Seattle are currently in delinquency. Yikes.
In related news, the Mastro bankruptcy is progressing, with the situation becoming seemingly more complicated with each update.
And, speaking of the commercial real estate market, Russell Investments just purchased the 42-story former WaMu Center for close to two thirds off what it cost to build just three years ago. Yowza.
It’s certainly an interesting time in the real estate and financing scene here in Seattle. How far we have come from just a year or two ago when everyone seemed to think that Seattle was bulletproof.
Categories: News
Tags: banks, commercial, construction, New York Times
By The Tim on August 23rd, 2009 at 7:00 PM · 67 Comments
This is a few weeks old, but it’s definitely worth watching if you haven’t yet. Elizabeth Warren, chair of the Congressional Oversight Panel (which was created to oversee TARP), has some frank words about the current state of the banks:
Here are a few transcribed excerpts.
Scarborough: “Are we out of the woods when it comes to toxic assets?”
Warren: “No.”
Scarborough: “How bad is it still?”
Warren: “…by and large, the toxic assets that brought us to this point are still on the books of the banks.”
Buchanan: “Are you saying that if they mark to market, and these assets were priced at what they’re really worth now, these banks would still be under water?”
Warren: “…once the folks changed the accounting rules… that means you can carry them on your books at a higher level than the market would treat them. And now the problem is the banks say: ‘In fact, why do I want to sell them? Because if I sell them, I can’t sell them at that value, I’m gonna have to sell them down at the lower market value. That means I have to recognize the loss.’ Recognize enough losses, and some of them are going to be gone.
Buchanan: “If all these banks, or an awful lot of these great big banks are under water if you price their assets what they’re worth, you could have a second big hit here, couldn’t you?”
Warren: “You could have real trouble.”
Warren: “If the idea behind rebuilding the economy is: ‘let’s use a lot of the bad practices we’ve used over the last five years, and see if maybe we get a little bubble going…’ I have to say, much of what is wrong and needs to be fixed is not rocket science.”
The blunt truth is that the policies that have been enacted in response to this financial crisis to date are nothing more than “extend and pretend,” where we hope that the banks can just fake it until the economy somehow magically rebounds.
Categories: News
Tags: banks, economy, link_roundup, MSNBC, video, Warren
By The Tim on August 15th, 2009 at 5:14 PM · 17 Comments
Kristen Grind over at the Puget Sound Business Journal had another great article about the unfolding mess with local developer Mike Mastro: Rival banks battle over Mastro bankruptcy
A legal battle between rival creditor banks over developer Michael Mastro Sr.’s real estate holdings is breaking out in federal bankruptcy court — a dispute that affects creditors’ ability to recoup their loans and sheds light on the extensive amount of property Mastro had amassed in the years before his financial trouble began.
Cascade Bank, Sterling Savings Bank, Golf Savings Bank and Washington Trust Bank, together owed more than $40 million by Mastro, have asked the court for permission to pursue their claims against him outside the bankruptcy proceeding. That would allow them to pluck their properties out of bankruptcy, foreclose on them and sell the properties to possibly recoup some of their losses.
But other creditors that are petitioning to force Mastro into involuntary Chapter 7 bankruptcy argue that a single proceeding would put all creditors, including individuals, on equal footing.
The banks — Columbia State Bank, Venture Bank and First Sound Bank — filed to put Mastro into liquidation in July, and Mastro has challenged the move. Until the court decides on whether Mastro can be forced into involuntary bankruptcy and whether some creditors can opt out, all legal proceedings are frozen.
The article also includes a list of some of Mastro’s multi-million dollar debts on various major projects around the area. One notable exclusion from the list was Northshore Townhomes, an 86-unit townhome complex in Kenmore featured on these pages last month. Mastro’s company owes $24 million to HomeStreet bank on that project.
Categories: News
Tags: bankruptcy, banks, Business Journal, developers, Grind, Mastro
By The Tim on May 18th, 2009 at 1:55 PM · 5 Comments
Over at the Puget Sound Business Journal, reporter Kirsten Grind posted an interesting story today on their recently-launched BizTalk blog: Crackdown on HomeStreet Bank comes as a surprise
Washington state regulators don’t seem to have much patience these days for our struggling community banks and are increasingly slapping them with cease-and-desist orders to force a turnaround at the institutions.
On Friday, not one, but two of our banks said they were being held on a tighter leash by regulators, including Seattle-based HomeStreet Bank.
For anyone who’s counting, we now have six banks statewide that are working under stricter regulatory rules. That’s a lot, by the way. It wasn’t so long ago that the state had no struggling banks and a cease-and-desist order was something out of the 1980s savings and loan crisis lore.
The post goes on to mention some good news for HomeStreet: increasing mortgage volume and deposits.
If you’d like to discuss the HomeStreet issue in further detail, be sure to check out the forum thread started earlier today by a HomeStreet customer, who writes:
I switched over to Homestreet about a year and a half ago when I decided not to support the large, failing and decidedly insolvent (without tax dollars) bank that I had been using (BOA). A lot of my decision was based on reading their CEOs repudiation of risky loan making and guarantees that Homestreet had not engaged in any of that behavior.
Imagine my disappointment when this nonsense showed up in my mailbox.
Personally, I’ve been doing my primary banking through a local credit union (Prevail) for about the last six years now, and have found the experience to be quite satisfying. Perhaps the stories just aren’t hitting my inbox, but I haven’t heard of any of the local credit unions receiving C&Ds or being in danger of going under…
Categories: News
Tags: banks, BizTalk, Business Journal, Grind, HomeStreet
Comment of the Week: Impulsive Behavior Disorder
By The Tim on August 28th, 2009 at 7:14 AM · 198 Comments
This comment of the week is brought to you by Jonness:
So what’s the cure for impulsive behavior disorder? Is there one? Surely there must be a way out of this self-destructive cycle, right?
→ 198 CommentsCategories: Features
Tags: affordability, bailout, banks, comments