Regulators close Florida bank,40th failure of 2011

[OhioChick]

Source: Reuters

Fri May 6, 2011 6:47pm EDT

May 6 (Reuters) - U.S. regulators closed a small Florida bank on Friday, bringing the total in 2011 to 40, the Federal Deposit Insurance Corporation said.

The Office of Thrift Supervision closed the Coastal Bank of Cocoa Beach, Florida, and appointed the FDIC as the receiver. The Premier America Bank, National Association, in Miami agreed to acquire Coastal Bank's two branches.

As of March 31, Coastal Bank had about $129.4 million in total assets and $123.9 million in total deposits. The closure of the bank will cost the FDIC's deposit insurance fund about $13.4 million.

Its two branches will reopen on Monday as branches of the Florida Community Bank, a unit of Premier American Bank.

Read more: http://www.reuters.com/article/2011/05/06/fdic-bankfailure-idUSN0612902320110506

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http://www.fdic.gov/bank/individual/failed/banklist.html

[freshwest]

1. I wish I could understand what happened. Accounting has always seemed alien to me. Or a scam.

[ixion]

2. Here's what happened (in many cases)

These little banks became enamored with CDO's (Credit Default Obligations) and other such murky "financial vehicles" that were created by bundling thousands of mortgages, good and bad, into a mixed bag, of sorts, and labeling them safe for investment. Here's the problem: They weren't. They were, in fact, highly-unstable, and when the real estate bubble burst, these 'stable' vehicles turned toxic to the tune of some 20 trillion dollars.

These 'vehicles' were created by the too-big-to-fail crew, of course.

And so city, county and state governments, and other like institutions -- like small banks -- dumped their portfolios into the vehicles thinking that real estate would just keep going up and up and up.

It didn't.

And now these small-ish banks, and these city, county and state governments, are all bust because the 'stable investment vehicles' they invested in are now worthless.

But don't worry. Citi and GS execs got big bonuses for crashing the economy, and they're doing great!

[freshwest]

3. So the sellers of the bad paper won't be punished, just the homeowners and taxpayers? This is like

the Keating, Neil Bush, S and L, Resolution Trust Corporation all over again, but ten times worse. Some of those guys went to prison.

[plumbob]

4. Precisely right.

Sellers of the bad paper in most cases got money from the bailout program and promptly handed out large bonuses to themselves.

[freshwest]

5. Thanks. In the Reagan years, they consolidated so much power from their previous thefts, that ...

The collapse of these big money houses would put the USA into martial law, or so it was threatened when Bush pushed it through. They've never had the power they do now. We must push to make sure that Elizabeth Warren is confirmed. They truly hate and fear her and she could help turn this around. It will take a while.