Ind. Town: Flight to Safety from Small Banks?

[Sapiens]

http://www.wcpo.com/news/local/story...f-e1cafadee002

Two cities in Dearborn County, Indiana have pulled millions of dollars from a local bank after rumors started circulating that the bank was in financial trouble.

Peoples Community Bank wound up losing over $20 million in deposits.

Lawrenceburg Clerk-Treasurer Jackie Stutz said she withdrew about $5.2 million from the bank in April because she didn't want to take any chances after hearing the rumors.

Peoples Community Bank said the problem is that the rumors were the problem.

The bank said it's financially sound.

Stutz said she had received a few calls from business associates stating the bank may be facing financial problems, so she talked to the city attorney and decided to withdraw the funds.

"The people of the city elected me and trust me with the boat money and all the money that the city has. I wouldn't want to do anything to betray there trust or to screw up in a big way," said Stutz from her Walnut Street office.

Tom Noe, Chief Financial Officer of the West Chester based Peoples Community Bank, said the bank is not having any fiscal problems.

Noe said the bank remains "well capitalized and has a tremendous amount of liquidity."

According to Stutz, the Lawrenceburg Conservancy District pulled about $14 million from the bank. The district maintains the levees and flood walls in Lawrenceburg.

The nearby Greendale Redevelopment Commission pulled out $600,000 and paid an early withdrawal penalty of $3,500.

Stutz said she believes in supporting local businesses and would consider depositing some funds into the bank again, if it's proven the bank isn't in any financial trouble.

"There's probably a chance, yeah. But I may be a little more careful about how much money I put there," said Stutz. "Instead of putting a lot of money, I may just put some where I know the accounts may be covered."

Peoples Community Bank said it has plans to talk to the cities about there concerns in hopes of getting them to start depositing funds in the bank again.

Prelude?

[tree]

Re: Ind. Town: Flight to Safety from Small Banks?

I find this story incredibly disturbing. Imagine something like this happening nationwide. People will not be able to function, much less spend.

I was browsing in Lord & Taylor's today. Overpriced stuff, uninteresting stuff made in China. Salespeople middle-aged and older, smiling and graceful. Almost no customers. I felt like crying, it was so depressing.

[Jim Nickerson]

Re: Ind. Town: Flight to Safety from Small Banks?

I find this story incredibly disturbing. Imagine something like this happening nationwide. People will not be able to function, much less spend.

I was browsing in Lord & Taylor's today. Overpriced stuff, uninteresting stuff made in China. Salespeople middle-aged and older, smiling and graceful. Almost no customers. I felt like crying, it was so depressing.

Now, now, tree, toughen up. If it turns out that the future holds that the American standard of living is to decline signficantly as others ascend, then I don't think we have seen anything so far.

[GRG55]

Re: Ind. Town: Flight to Safety from Small Banks?

I find this story incredibly disturbing. Imagine something like this happening nationwide. People will not be able to function, much less spend.

I was browsing in Lord & Taylor's today. Overpriced stuff, uninteresting stuff made in China. Salespeople middle-aged and older, smiling and graceful. Almost no customers. I felt like crying, it was so depressing.

Now, now, tree, toughen up. If it turns out that the future holds that the American standard of living is to decline signficantly as others ascend, then I don't think we have seen anything so far.

Hard to imagine the American standard of living would actually decline just because they've finally come to their senses and ceased the purchase of "Overpriced stuff, uninteresting stuff made in China"...:rolleyes:

A few less lead-painted toys might be a blessing? :rolleyes: :rolleyes:

[tree]

Re: Ind. Town: Flight to Safety from Small Banks?

Now, now, tree, toughen up. If it turns out that the future holds that the American standard of living is to decline signficantly as others ascend, then I don't think we have seen anything so far.

Well, thank you, Dr. Jim, but I am not tough, not tough at all. Just a weepy-wiper, I am.

BTW, I saw a very strange Associated Press story, that got buried last week, about how everything was falling apart but people shouldn't despair because the last time this happened, Horatio Alger made a bundle writing rags to middle-class riches inspirational stories.

Then I looked up Horatio Alger online and it seems he had a lifelong taste for boys. I had never heard this before.
I doubt the AP writers bothered to look up Alger before they wrote. Nor their editors before running the story.

I could write such stories today, as I too am developing an interest in boys, select individuals around 19 or 20.

[Sapiens]

Re: Ind. Town: Flight to Safety from Small Banks?

http://online.wsj.com/public/resourc...701-sort.html#

Table showing U.S. small banks with sizable exposure to construction and land loans and with notable delinquency rates

[GRG55]

Re: Ind. Town: Flight to Safety from Small Banks?

Prelude?

Looks like it...

No Loans at Mountain 1st Means Credit Drying Up at Local Banks

By Mark Pittman
July 2 (Bloomberg) -- Mountain 1st Bank & Trust Co. Chief Executive Officer Greg Gibson forecast 12 percent loan growth for his North Carolina bank this year. Instead, he's spending more time handing out freshly baked cookies than extending credit.

Gibson is ``standing on the brakes'' because Mountain 1st, owned by 1st Financial Services Corp. of Hendersonville, North Carolina, can no longer sell trust-preferred stock to raise capital for loans so customers can buy airplanes or build veterinary clinics, Gibson said in a June 20 telephone interview. The bank, with $650 million in assets, is among more than 8,000 across the U.S. caught for the past six months in the shutdown of the $117 billion market for the securities, a hybrid of debt and equity.

The fallout from the subprime-mortgage collapse is spreading from global lenders such as Citigroup Inc. and UBS AG to local ones, including Lansing, Michigan-based Capitol Bancorp, FirsTier Corp. of Northglenn, Colo. and Mountain 1st, which tempts customers at log cabin-style branches with cookies and coffee. Less capital for such hometown banks may stymie Federal Reserve Chairman Ben Bernanke's effort to prevent a credit crunch.

``There is no question there is a problem,'' said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America, a Washington-based trade group for about 5,000 lenders. ``Banks need the capital to lend. So that problem of raising capital causes a further slowdown. This inability to raise capital points to a damping of the whole economy.'' ...
http://www.bloomberg.com/apps/news?p...Rqs&refer=home

[metalman]

Re: Ind. Town: Flight to Safety from Small Banks?

Looks like it...

No Loans at Mountain 1st Means Credit Drying Up at Local Banks

By Mark Pittman
July 2 (Bloomberg) -- Mountain 1st Bank & Trust Co. Chief Executive Officer Greg Gibson forecast 12 percent loan growth for his North Carolina bank this year. Instead, he's spending more time handing out freshly baked cookies than extending credit.

Gibson is ``standing on the brakes'' because Mountain 1st, owned by 1st Financial Services Corp. of Hendersonville, North Carolina, can no longer sell trust-preferred stock to raise capital for loans so customers can buy airplanes or build veterinary clinics, Gibson said in a June 20 telephone interview. The bank, with $650 million in assets, is among more than 8,000 across the U.S. caught for the past six months in the shutdown of the $117 billion market for the securities, a hybrid of debt and equity.

The fallout from the subprime-mortgage collapse is spreading from global lenders such as Citigroup Inc. and UBS AG to local ones, including Lansing, Michigan-based Capitol Bancorp, FirsTier Corp. of Northglenn, Colo. and Mountain 1st, which tempts customers at log cabin-style branches with cookies and coffee. Less capital for such hometown banks may stymie Federal Reserve Chairman Ben Bernanke's effort to prevent a credit crunch.

``There is no question there is a problem,'' said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America, a Washington-based trade group for about 5,000 lenders. ``Banks need the capital to lend. So that problem of raising capital causes a further slowdown. This inability to raise capital points to a damping of the whole economy.'' ...
http://www.bloomberg.com/apps/news?p...Rqs&refer=home

itulip... right even when they're wrong...

Fast forward to March 2006. The NASDAQ has mostly stayed in the dumper, with various dot com stinkers sinking and disappearing into the history books, again, predictably. The DJIA, by a combination of a re-constitution of the easily manipulated 30 stock index -- throwing out some losers and adding in some winners -- and inflation has fought its way back to where it was six years ago – flat. Except that, adjusted for inflation, it is down at about 20%. But that hasn't kept Cramer from returning to CNBC to rant and throw chairs around while touting the latest "can't lose" stocks. Not coincidentally, gold has gone up, as we forecast in 2001 when gold was trading near 20 year lows and widely derided as a loser investment class. But what really kept the U.S. out of poorhouse, if only until now, was the housing bubble. But not only did we fail to predict the housing bubble in 2001 as the Fed's answer to the stock market bubble collapse, we argued that the Fed would never allow one to develop.

Wrong.

Our thinking was that in the past the Fed has been very quick to stop speculation in real estate, much more quickly than stock market speculation. Why? Real estate involves the banking system much more than the stock market bubble did and looking after the banking system is Job One for the Fed. Letting millions of homeowners buy real estate they can't afford with mortgages they can never pay back is a surefire road to mass defaults that can cripple the banking system. When a relatively normal housing cycle boom ended in the early 1990s, the U.S. banking system seized up. That response to the downside of that minor real estate cycle was a gran mal seizure compared to the massive stoke that the banking system is likely to suffer on the back end of this real estate freak show. More importantly, the political aftermath of a real estate bubble is the macro economic devastation of the host country's economy. Lots of unemployment and negative wealth effects that keep consumers home sulking and saving, not out at the mall buying goods from Asia that keep Asian central banks inspired to lend, and the virtuous circle of lending, borrowing, importing and exporting going, in our case leading to recessionary, inflationary and other re-election sensitive negative economic conditions. So why take the chance? Because it looked better, at the time, than the obvious alternative: a huge recession and unemployment before the 2004 elections – never good for anyone's re-election bid. - iTulip About - March 2006