It’s not just CIT (CIT). Other banks that have taken TARP are in trouble.
ProPublica: The government has doled out billions to 687 banks over the past year through a program meant to bolster already “healthy” banks. But an increasing number of those are troubled. Four banks in particular are foundering, including one that has acknowledged its executives cooked its books.
One of the four is CIT but here’s the article’s rundown on the others:
- United Commercial ($299 million bailout): Analysts say it is in danger of being closed and sold by the FDIC given the findings of an internal investigation that the bank revealed last month. The bank’s earlier disclosures of its financial health were unreliable, the bank said, partly because some of its executives, “driven by an apparent desire to downplay deteriorating financial conditions,” had fudged losses and misled its auditors through “deliberate and improper actions.” The bank must raise capital and deal with its “large volume of poor quality loans,” reads the Sept. 3 order. The bank’s CEO and COO resigned. The CFO was demoted.
- AnchorBank ($110 million bailout): Regulators cracked down on AnchorBank in June and ordered it to raise its capital cushion to absorb bad loans. If the bank doesn’t meet regulators’ targets, it risks a greater crackdown, including being placed in conservatorship or receivership, the bank disclosed in August. As of the end of June, the bank still didn’t have enough capital. AnchorBank” prospects got even bleaker last month, when it reported that it would have to restate last quarter’s earnings to reflect much larger losses. It said it would do so late last month, but never did. Earlier this month, the bank told us it had missed its August Treasury dividend payments to “preserve capital at both the holding company and bank levels.”
- Pacific Coast National ($4.1 million). Four months after taking the money, the bank said it had recently discovered its loan portfolio was much worse off than it had appeared. Rather than being healthy at the time Treasury invested the funds, it had actually been “significantly under-capitalised.” In August regulators ordered the bank to raise capital and come up with a plan to save the bank. The bank’s capital levels remain far below those required by regulators, and the bank says it’s at risk of receivership if its situation continues to deteriorate.
Read the full thing here.
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