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UPDATE 2: SEC Memo says Guaranty Bank to be Seized, not Sold
- GoingConcern
- August 4, 2009
Editor’s Note: Teri Buhl is a Wall Street investigative reporter who has written for the New York Post, Trader Monthly and HousingWire.com. Her big scoops include breaking news on all things wrong at IndyMac, calling out Bob Steel for lying to investors about losses on CNBC, and shining a light on Wells Fargo for manipulating earnings with paper accounting gains. She resides in lower Fairfield County, CT and actually earned an accounting degree from U er case of the Feds proping up zombie banks, sources have reported that an SEC memo has stated that the FDIC will seize Guaranty Bank (GFG: 0.123, -5.38%) and it will not be sold as previously rumored.
This continues the trend of bank seizures occurring with virtually no warning. According to one prominent hedge fund manager:
“The problem is that the regulators know that if they call these things anything worse than “well capitalized”…it is a kiss of death. In many ways it is the same issue as rating agencies (curse of the AAA) that know that if they downgrade certain types of companies, they are putting them out of business. As a result, many banks are “well capitalized” until the day they are seized. It is absurd.”
More, after the jump
Austin, Texas based Guaranty Bank just updated its bank reports to show a $1.8 billion loss for the 1st quarter, of which $1.6 bil was due to “Other-Than-Temporary Impairment Charges on Debt and Equity Securities”. Um, not good.
What’s worse is that, according to our OTS sourcing, this will be a full shutdown. This means that after insured deposits are returned the bank will be unwound and put out to pasture. No cash rich private equity groups will sweep in to offset losses and clean up the regulator’s mess this time.
The updated bank regulatory reports show Guaranty’s assets are now $13.35 billion, with over 70% of those assets being real estate related. There are $2.1 billion in deposits listed as uninsured. Guaranty operates 164 branches and employs around 1,700 people.
Sourcing inside the regulator said,”Considering the OTS let the bank defer taking write-downs, I’m sure there will be skeletons that will embarrass the OTS again.”
The seizure will hit the FDIC’s budget to the tune of at least $5.3 bil according to sources within the OTS. Another top bank analyst has predicted the hit to be closer to $8 billion.
This, on top of what’s going on with Colonial Bank failing, should wipe out what’s left of the FDIC’s budget. As a result, they are going to have to borrow from the Treasury and then add that cost to our nation’s banks, which we all know just gets passed on to the taxpayer in the form of higher banking fees.
Paul Miller, analyst for FBR Capital Markets, told Going Concern, he believes that banks will be assessed a fee of 5 bps of total assets this fall in order to fund the FDIC’s empty coffers. This new fee assessment will raise $5 billion for the FDIC’s bank seizure budget.
We’ll continue to update this story as we learn more.
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Accountant of the Decade Poll
- Caleb Newquist
- December 17, 2009
Picking nominees for Accountant of the Decade was not an easy task and we hope we’ve presented you with some appropriate nominees. If you don’t like the any of them then you should’ve been more vocal during the nomination process.
Or put another way: piss off.
Personally, we would have nominated Stella but we vowed to let the people speak on this matter and not allow our personal preferences to cloud the democratic process.
The nominees are as follows:
Peter Olinto — CPA; JD; Rival of P. Diddy; CPA Exam Maven; Lover of mnemonic devices.
Tim Flynn — Chairman of KPMG; Servant of capital markets; Part-time caddy to Phil Mickelson; Full-time sweater vest buddy to Phil Mickelson.
Tim Gearty — CPA; Infrequent Tweeter; CPA Exam Maven; Kicks it with Bob Herz on boats.
Andy Fastow — Enron CFO; Book cooker; Asshole (so we hear); Inmate #14343-179.
David Friehling — Former partner at Friehling & Horowitz; Bernie Madoff pal; Worst auditor ever; Inmate #TBD.
Now vote.
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We’d All Appreciate It if Grant Thornton Got Involved in a New Lawsuit
- Caleb Newquist
- October 23, 2009
Grant Thornton just isn’t able to shake Parmalat, the freaky-ass extended-life milk company. Parmalat appealed the latest dismissal of its lawsuit against GT and Bank of America that accuses the two companies of helping set up phony transactions so “insiders could steal from the company.”
Parmalat’s Chief Milk-Magician, Enrico Bondi, is obviously not satisfied with the $100 million that he twisted away from BofA and will continue to hassling both companies until long past the expiration date on his product.
Parmalat appeals BofA, auditor lawsuit dismissals [Reuters]