Interesting they are selling the assets to a foreign bank, presumably at high rates of return. Just one more thing that pushes exports and reduces our real terms of trade and standard of living.
Also, by addressing the banking issue from the ‘top down’ by funding the banks and supporting net interest margins, the US govt. has neglected the borrowers who are still not earning sufficient income working (or collecting unemployment) to make their payments.
The answer was my payroll tax holiday, per capita revenue sharing, and $8/hour job for anyone willing and able to work. That would still immediately reverse things and prevent continuing deterioration, but the losses are gone forever.
It has been widely reported that the assets of Guaranty Bank (Texas) will be seized Friday by the FDIC and sold to Banco Bilbao Vizcaya Argentaria SA of Spain.
Meanwhile the OTS issued a Prompt Corrective Action (PCA) to Guaranty yesterday. Maybe they didn’t get the memo …
Also, from the WSJ: In New Phase of Crisis, Securities Sink Banks
Guaranty owns roughly $3.5 billion of securities backed by adjustable-rate mortgages, with two-thirds of the loans in foreclosure-wracked California, Florida and Arizona, according to the company’s latest report. Delinquency rates on the holdings have soared as high as 40%, forcing write-downs last month that consumed all of the bank’s capital.
Guaranty is one of thousands of banks that invested in such securities …
It’s not just their own bad loans (usually C&D and CRE) taking down the local and regional banks, but also bad investments in securities based on other bank’s bad loans.
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