Friday, February 26, 2010

FDIC Fridays Update and Unemployment

It's been ages since I brought you an update on FDIC bank closings, so I'll do a quick month-by-month here today. Plus, let's take a look at the so-called "lagging indicator" ...job gains/losses.

FDIC Closings (Bank Failings) 2009 and 2010 (as of Feb. 26, 2010):

Jan 2009 - 6
Feb 2009 - 10
Mar 2009 - 5
Apr 2009 - 8
May 2009 - 7
Jun 2009 - 9
Jul 2009 - 24 (Yes... 24 in a single month!!!)
Aug 2009 - 15
Sep 2009 - 11
Oct 2009 - 20
Nov 2009 - 9
Dec 2009 - 16
Jan 2010 - 15
Feb 2010 - 7

Total Bank failures in 2005: 0
Total Bank failures in 2006: 0
Total Bank failures in 2007: 3
Total Bank failures in 2008: 25
Total Bank failures in 2009: 172
Total Bank failures in 2010 (as of Feb 26/2010): 22

Rumor has it that the number of bank closings by the FDIC are about to rise as several new Federal FDIC employees have been added of late... just a rumor so far?


Is it really "credit drying up" that is causing the problems for small businesses in the USA? Or is it the disappearing bank phenomenom that's causing the problem? Kinda makes you wonder, doesn't it?

Let's see...

How do we compare with other countries in bank closings? Well, I'm going to stick to Canada and the USA for this one because I don't have time to dig up the stats for all the other countries. Plus, I'm only taking a look at the year 2009... the bank closings that have happened on Obama's watch.

Are you sitting down?

Here we go....

Total banks closed in USA for 2009: 172
Total banks closed in CAN for 2009: 0

There are several reasons Canadian banks have faired so well, including the regulations placed upon them by their Federal Government... regulations which are strictly enforced.

But there is a dark side. Talk to any Canadian business owner and most will tell you that "the only way we can get a business loan, any loan, is if we don't need the money."

Yes, the banks up north are definitely risk averse. None can deny it. And their accounting practices and related regulations are strongly enforced... something that helped them avoid the fallout most of the rest of the world's financial institutions felt.

In Canada, liabilities (read mortgages) were kept on their books... not repackaged and sold as "securities" (and resold and resold and resold, magically converting liabilities into assets) which is the TRUE root cause of the Wall Street collapse. When a default occurred, no one was certain who actually owned it because repackaging and selling had become so rampant here in the USA and elsewhere.

One truly has to wonder, though, with all the small banks being closed across the USA right now... is there another agenda afoot by the current Administration? I'm guessing this op-ed article published a year ago (in Feb. 2009) probably has it spot on:

"The Great Solvent North"

There is a certain stupidity in this bank-envy if, in fact, the Obama Administration is trying to emulate the Canadian banking system here in the USA. I refer to "fuzzy accounting practices" and "lax regulation enforcement" to mention just two of many things that will bring about the downfall of any such bull-headed attempt... or should I call it a "bear"-headed attempt?

If this is indeed the path the Administration is following, buckle up America. This Administration has already proven to lack vision with respect to seeing the BIG Picture along with the SMALL Picture, IMHO. You think jobs are tough to find now? You have absolutely no idea how truly bad it's going to get.

Speaking of which...

Let's move on to that "lagging indicator" everyone is talking about, shall we? Here's how the cookie crumbles as far as national unemployment...

Seasonally Adjusted Unemployment Numbers
Bureau of Labor Statistics (pdf)

Jan 2009: 7.7 <---- Obama steps in and 2nd 1/2 of TARP released
Feb 2009: 8.2 <---- ARRA (Stimulus) forced thru
Mar 2009: 8.6 <---- ARRA (Stimulus) starts
Apr 2009: 8.9
May 2009: 9.4
Jun 2009: 9.5
Jul 2009: 9.4
Aug 2009: 9.7
Sep 2009: 9.8
Oct 2009: 10.1
Nov 2009: 10.0
Dec 2009: 10.0
Jan 2010: 9.7

How do we look when compared with other countries out there with respect to annual (adjusted) average unemployment going up? Let's take a quick look by Quarters (Source - USA BLS):

............. USA ... CAN .. AUS .. JAP .. FRA .. GER .. ITA .. NLD .. SWE .. UK
Q 1/09 __8.2____6.7___5.3___4.5___8.7___7.7___7.4___3.1___7.4___7.1
Q 2/09 __9.3____7.5___5.7___5.3___9.2___8.0___7.6___3.3___8.2___7.8
Q 3/09 __9.7____7.8___5.8___5.5___9.3___8.0___7.9___3.5___8.5___7.9
Q 4/09 _10.0____7.6___5.7___5.2___9.6___7.9___8.4___8.8___ na ___ na

Sidenote: NLD=Netherlands

Fourth Quarter figures were not available for Sweden or United Kingdom at the time of writing this article... but if we look at the "trend" here, I'd guess we're #1 in unemployment.

Source: Bureau of Labor Statistics

So... how's that Stimulus working for you?

You can't fudge the numbers. This is all happening on Obama's watch. As much as we know Dems love to blame everyone and anyone else for their sloppy -- dare I say stupid? -- administration skills... history will show them at the helm. The buck stops right on the doorstep of the White House itself.