Banking Under Stress – Data Behind A Fear

| August 22, 2007

The past 2 weeks have seen a great deal of activity in an otherwise very orderly and well structured financial system. As many of you know it’s a bit of a personal crusade to expose useful information that is hidden in plain sight, and expose it in a way that helps normal people gain insight on what is going on.

Some of you may have heard last week that the US Federal Reserve (Fed) cut a key bank rate – specifically to help provide cash to help keep the system from seizing up. If you listen to the financial press, you would think this is all because of sub-prime problems. While sub-prime may eventually be sited as the trigger for what will likely be a significant financial correction across many asset classes, it is wrongly being blamed now for all these problems.

In reality, for many years, everyone and their brother was loaning out money to anyone for any reason. A good portion of that was either a bad idea or outright fraud. Many good and decent people and businesses are going to be holding the bag. I present as my supporting evidence, the following information from the FDIC in March. For those of you who don’t know – the FDIC is the government body that regulates and insures banks. As an outcome of the problems surrounding the Great Depression of 1929, a wonderful set of rules were put in place that have given us tremendous banking stability since. It has really been the underpinning of the financial success of the USA, and it served as a model for the rest of the world.

As a result, a wealth of information is reported by the banks, and is made available to anyone with the patience and tenacity to dig it out. We specialize in creating tools that can sift though mountains of annoying data an boiling it down to understandable fact.

Below is a table from an initial run of a new tool that works with this data. It shows banks that are holding large amounts of loans that are now 90 days or greater past due. This means foreclosure time is fast approaching. The value is in dollars. Remember this is from March, long before this summer’s record setting rates of foreclosure.

Bank Name City State Loans 90 Days Delinquent First Note Second Note HELOC
Wells Fargo Bank, National Association Sioux Falls SD $3,809,000,000 $3,742,000,000 $11,000,000 $56,000,000
National City Bank Cleveland OH $1,049,565,000 $993,613,000 $9,309,000 $46,643,000
Citibank, National Association Las Vegas NV $806,000,000 $803,000,000 $3,000,000 $0
U.S. Bank National Association Cincinnati OH $629,303,000 $599,752,000 $9,758,000 $19,793,000
MidFirst Bank Oklahoma City OK $589,642,000 $589,642,000 $0 $0
EverBank Jacksonville FL $241,533,000 $241,533,000 $0 $0
SunTrust Bank Atlanta GA $187,579,000 $181,176,000 $5,549,000 $854,000
Regions Bank Birmingham AL $184,690,000 $139,482,000 $3,924,000 $41,284,000
Wachovia Bank, National Association Charlotte NC $184,000,000 $119,000,000 $25,000,000 $40,000,000
First Tennessee Bank, National Association Memphis TN $159,041,000 $134,438,000 $2,749,000 $21,854,000
LaSalle Bank Midwest National  Association Troy MI $138,737,000 $138,707,000 $30,000 $0
Washington Mutual Bank Henderson NV $120,079,000 $114,662,000 $228,000 $5,189,000
Bank of America, National Association Charlotte NC $107,771,000 $107,771,000 $0 $0
Manufacturers and Traders Trust Company Buffalo NY $94,476,000 $90,203,000 $4,273,000 $0
Fifth Third Bank Cincinnati OH $85,411,000 $70,607,000 $1,810,000 $12,994,000

To be fair, this picture is not complete. The largest problem is not going to be with the banks, but with the investment firms, retirement funds, pension plans and corporations that are holding the majority of the toxic loans – both mortgages and derivatives – that were written in the past 4 years.

More information as we get this new mashup application on line.

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Category: Credit Backlash, Main

About the Author ()

Bruce Henderson is a former Marine who focuses custom data mining and visualization technologies on the economy and other disasters.

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