Bank Collapse Watch: Haven Trust

24th bank failure: Fifth in Georgia
State regulators close Duluth, Ga.-based Haven Trust Bank, marking the 24th bank failure of the year.

NEW YORK (CNNMoney.com) — State regulators closed another regional bank in Georgia Friday, bringing the total number of failed banks this year to 24.

The Federal Deposit Insurance Corp. said the four branches of Duluth, Ga.-based Haven Trust Bank will reopen as Branch Banking & Trust on Monday. It was the fifth bank in Georgia to fail this year.

Haven Trust had total assets of $572 million and total deposits of $515 million. Branch Banking & Trust, which is based in Winston-Salem, N.C., agreed to assume all of the deposits for $112,000.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $200 million.

Emphasis added by me.

Haven Trust was number sixty on the List of Future Bank FAIL.

Who will go FAIL next Friday?

Chronicles Of Depression 2.0: #470: Madoff

Prominent Trader Accused of Defrauding Clients

On Wall Street, his name is legendary. With money he had made as a lifeguard on the beaches of Long Island, he built a trading powerhouse that had prospered for more than four decades. At age 70, he had become an influential spokesman for the traders who are the hidden gears of the marketplace.

But on Thursday morning, this consummate trader, Bernard L. Madoff, was arrested at his Manhattan home by federal agents who accused him of running a multibillion-dollar fraud scheme — perhaps the largest in Wall Street’s history.

Regulators have not yet verified the scale of the fraud. But the criminal complaint filed against Mr. Madoff on Thursday in federal court in Manhattan reports that he estimated the losses at $50 billion. “We are alleging a massive fraud — both in terms of scope and duration,” said Linda Chatman Thomsen, director of the enforcement division at the Securities and Exchange Commission. “We are moving quickly and decisively to stop the fraud and protect remaining assets for investors.”

Andrew M. Calamari, an associate director for enforcement in the S.E.C.’s regional office in New York, said the case involved “a stunning fraud that appears to be of epic proportions.”

Emphasis added by me.

I was waiting for this story to pop with a write-up that would concisely summarize the point. Here it is:

But the essential drama is a personal one — one laid out in the dry language of a criminal complaint by Lev L. Dassin, the acting United States attorney in Manhattan, and a regulatory lawsuit filed by the S.E.C. According to those documents, the first alarm bells rang at the firm on Tuesday, when Mr. Madoff told a senior executive he wanted to pay his employees their annual bonuses in December, two months early.

Just days earlier, Mr. Madoff had told another senior executive he was struggling to raise cash to cover about $7 billion in requested withdrawals from his clients, and he had appeared “to have been under great stress in the prior weeks,” according to the S.E.C. complaint.

So on Wednesday, the senior executive visited Mr. Madoff’s office, maintained on a separate floor with records kept under lock and key, and asked for an explanation.

Instead, Mr. Madoff invited the two executives to his Manhattan apartment that evening. When they joined him there, he told them that his money-management business was “all just one big lie” and “basically, a giant Ponzi scheme.”

The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the cash received from other investors.

Emphasis added by me.

I don’t give a shit that he’s 70.

He wagged his dick in contempt of everybody for decades.

Flay the bastard to death in public.

How many others are out there just like him that we don’t yet know about?

Chronicles Of Depression 2.0: #469: EU $267B

Businesses: Smugness = Lost Customers!

You would think, here in the 21st century, companies would realize people talk to one another all the time now.

And also, with the economy turning blue worldwide, companies would want to hold onto customers.

Here’s a clue, lulu, from the recently-deceased Randy Pausch:

Words, by the way, we haven’t heard uttered by anyone getting bailout money.

Chronicles Of Depression 2.0: #468: End Of Days

Vauxhall Insignia 2.8 V6
An adequate way to drive to hell

Yes, this is a car columnist. Yes, this is a column about cars.

It also presents the most frank assessment of our economic doom.

I have spoken to a couple of pretty senior bankers in the past couple of weeks and their story is rather different. They don’t refer to the looming problems as being like 1992 or even 1929. They talk about a total financial meltdown. They talk about the End of Days.

Emphasis added by me.

And:

It is impossible for someone who scored a U in his economics A-level to grapple with the consequences of all this but I’m told that in simple terms money will cease to function as a meaningful commodity. The binary dots and dashes that fuel the entire system will flicker and die. And without money there will be no business. No means of selling goods. No means of transporting them. No means of making them in the first place even. That’s why another friend of mine has recently sold his London house and bought somewhere in the country . . . with a kitchen garden.

These, as I see them, are the facts. Planet Earth thought it had £10. But it turns out we had only £2. Which means everyone must lose 80% of their wealth. And that’s going to be a problem if you were living on the breadline beforehand.

Eventually, of course, the system will reboot itself, but for a while there will be absolute chaos: riots, lynchings, starvation. It’ll be a world without power or fuel, and with no fuel there’s no way the modern agricultural system can be maintained. Which means there will be no food either. You might like to stop and think about that for a while.

Emphasis added by me.

Oh, you can read it again and again and wonder if his tongue is planted in his cheek. That’s what the Brits are very, very good at doing. But reading through it carefully, all to the end, and no, he’s telling the truth you won’t see on front pages.

Update: Jeremy Clarkson on car sales decline — here’s a BBC video with him on the radio briefly mentioning key points written above. You decide. I don’t see tongue-in-cheek. (Thanks to Alan Pritt for this!)

Chronicles Of Depression 2.0: #467: Slingshot

The $7 trillion question
Do expansive federal bailout plans doom Americans to an inflationary future?

NEW YORK (Fortune) — A billion dollars here, $7 trillion there: How long till Uncle Sam has to cry “uncle?”

For now, frightened investors worldwide continue to gobble up U.S. Treasury bonds, and they aren’t much concerned about the impact of all the obligations the U.S. government is taking on to try and head off economic catastrophe.

But the government printing money, lending money to shaky corporations and guaranteeing debt that may never be repaid all could have troubling consequences in the not-too-distant future.

The No. 1 concern: Even if actions taken by the Federal Reserve and the U.S. Treasury succeeds at stabilizing the global financial system, and an economic recovery takes hold, a brutal inflationary spike will be right around the corner.

“Inflation is the 8,000-pound gorilla in the room,” said Gary Hager, president of Integrated Wealth Management in New Jersey. “We’re sitting in the room with the coffee cups vibrating.”

In that environment, long-term interest rates would soar, the value of the U.S. dollar would plummet, policy makers would face a whole new set of challenges.

Emphasis added by me.

Pay attention. This is the brutal truth you will be facing:

“Everyone is going to lose something,” said Will Hepburn, president and chief investment officer of Hepburn Capital Management in Prescott, Ariz. “The winners will be those who end up losing the least.”

Emphasis added by me.

Here’s what’s already gone:

Hepburn gives federal officials “bonus points” for concocting innovative responses to the credit crunch. The ongoing collapse of U.S. stock market and real estate values, he said, has slashed U.S. household wealth by at least $10 trillion – and those paper losses could go much higher before the swoon ends.

Emphasis added by me.

How’s that 401K looking these days? What will be left of it tomorrow?

Taleb said things could happen fast. Here’s the recent history:

But Hager notes that it was only four months ago that oil cost $100 a barrel more than its recent $47, which shows how quickly market dynamics can change.

What’s more, he said, while people are still struggling to figure out the costs tied to starting up and overseeing the government bailouts, no one seems to have put much thought to an equally important endeavor – how the government withdraws the massive support it has offered the markets in the event its efforts start to bear fruit.

While efforts to thaw the credit markets are taking effect slowly, Tom Sowanick, chief investment officer at Clearbrook Financial, sees a risk that they could suddenly become much more effective, leading to a jump in prices and a selloff in the dollar.

“The economy’s in a bit of a slingshot,” said Sowanick. “We are looking at a high probability of inflation issues ahead.”

Emphasis added by me.

But this is what I want you to remember of this post:

“Everyone is going to lose something. The winners will be those who end up losing the least.”

Emphasis added by me.

If they have their way, we will lose the most. I say let’s all be losers — so we can all be winners.

Chronicles Of Depression 2.0: #466: Taleb #2

This next video is of Nassim Nicholas Taleb.

He’s a frikkin genius.

His first book, Fooled by Randomness, is one of the Immortal Works. And if you haven’t read it, you are walking around blind and intellectually malnourished. Correct that ASAP.

I’ve been screaming Doom for nearly twelve months.

And now I have to confess that this video scares the living shit out of me. Moreso than anything else I’ve posted here.

— from Great Moment in Journalism: “Thud”

Previously here:

What Thing Will Happen To Us?
Chronicles Of Depression 2.0: #346: Taleb

Chronicles Of Depression 2.0: #464: Unfluence

End of Work, End of Affluence

I can’t give a direct link to the above item. He seems to do one monster post each week or so. So go to the site and search for it.

Let me show you how good things used to be in this country:

[. . .] even minimum wage ($1.60/hour in the late 60s, I know because my wage stub recorded it) bought far more goods (purchasing power) then than minimum wage does now.

Emphasis added by me.

$1.60 an hour. And you could rent a good apartment for that. You could not only rent a good apartment, you could:

– pay for electricity
– pay for cooking gas
– pay for food
– buy clothes for work and leisure
– put away some for savings

Yes: savings! You’d wind up with money left over after simply maintaining your life!

You could in fact work part-time and still have an apartment and meet basic life-support requirements.

Today, working part-time can’t even afford homelessness!

Here’s a question for all of you to consider:

Meanwhile, in TLCIA circa 2008, obscene “compensation packages” are defended as “free enterprise.” Well, what did we have in 1969? Unfree enterprise?

None of you yet understand that the monster levels of compensation we’ve seen since the 1980s would have been seen as obscene and abnormal before then.

Sure, there had always been stars — movie, radio, and a few TV ones — who made money. But in general those people had actual class and didn’t flaunt their luck and by and large behaved in accordance with the traditional values of the larger society. For one, they gave generously to charity. Second, they encouraged others to do so too.

Dick Fuld, who pocketed four hundred million dollars in one year — quick, tell me the charities he recommended and volunteered time to!

Michael Milkin got all charitable and fuzzy-hearted once his prostate came under attack. Before then, he was all puff-chested and the Junk Bond King of Fuck You All.

Society used to work for everyone.

The above post goes into detail how it might devolve to work for no one.

Who wants a society like that?

Quote: Barry Ritholtz

Blaming Moody’s

All of these motherfuckers need to be thrown in prison, where they will be sodomized on a daily basis for the rest of their lives.

Chronicles Of Depression 2.0: #463: The Ws

You Can Only Bury Your Head In The Sand For So Long

People don’t seem to understand, or maybe they just don’t want to understand, or maybe the talking heads are trying to keep them from understanding, how bad this is, this crisis, this financial crisis, this “slowdown”, this “contraction”.

Let me help. The U.S. is broke. States and municipalities are in debt up to their eyeballs. Trillions of “dollars” are being spent by government agents in a desperate attempt to hold back the flood of bankruptcies and liquidations — bankruptcies and liquidations that MUST eventually occur — for another month or two. The international banking system teeters on the brink of implosion. In the eyes of Henry Paulson and Ben Bernanke, everyone has become too big to fail, because these guys know that failure of one could mean a collapse of all. The entire human web of interdependence — not simply in the financial realm of Collateralized Debt Obligations and Mortgage Backed Securities and Credit Default Swaps and Futures and Options and Bonds and the like, but of tangible infrastructure, like food and water and power and fuel and all of things we need to survive — it is all hanging together by a thread. And in some parts of the world the thread has already frayed away to nothing, exposing people to the real-life horrors of collapse.

Emphasis added by me.

This is a post many of you will note in passing right now and then come back to later in panic. He goes over the Ws:

WHEAT, WATER, WATTS, WASTE, WELLNESS and WORK.

You’ll be repeating those to others at some point in 2009.

Or having people on TV reciting them to your face.

That’s if you still have electricity.

For those of you who mocked my term “micro-terrorism,” especially note this:

Terrorists in countries such as Colombia frequently attack the power-grid infrastructure, often leaving homes and businesses without power for weeks at a time. The power-grid infrastructure in the United States is virtually unprotected and remains an exceptionally soft target for both domestic and foreign-based terrorists.

Previously here:

AMERICAN GOTTERDAMMERUNG