Banks near collapse. Little known Texas Ratio

I did a search before posting this, and I was surprised no one has brought up the subject on ATS.

The recent collapse of IndyMac spurred a CBS story about a little known (to the public) formula called the Texas Ratio that banks use to judge the health of the bank

The Texas ratio is calculated by dividing the institution's bad and delinquent loans by its cash on hand plus money set aside to cover loans that go bad. A ratio of 100 or higher means a bank is in deep financial distress. IndyMac's recent Texas ratio was 116.

www.cbsnews.com...

But here's what is alarming

Other banks and savings institutions' Texas ratios, once closely held by banking industry insiders, are now leaking to the public.

CBS News has obtained a list compiled just last month of 50 institutions, many with ratios higher than IndyMac's.

www.cbsnews.com...

It appears that some banks are in serious trouble. Check this out

Those with the highest Texas ratios are smaller, community banks such as Colorado Federal Savings Bank, with a Texas ratio of 709; Integrity Bancshares in Georgia, with a ratio of 371; Stockgrowers State Bank of Maple Hill, Kan., has a 369; and Mesilla Valley Bank in New Mexico, with a 362.

www.cbsnews.com...

A Texas Ratio of 709 means that Colorado Federal Savings Bank has 7 times! bad and delinquent loans to cash and asset on hand.

Who is regulating these banks?

And these are the banks that have allowed this to leak out!

We are not hearing about the big banks, except for Freddie Mac and Fannie Mae.

LONDON (MarketWatch) -- Kenneth Rogoff, the former chief economist of the International Monetary Fund, reportedly said Tuesday that a large U.S. bank will collapse in the next few months. "We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," Rogoff told a conference in Singapore, according to a Reuters report

www.marketwatch.com...

Is it time to start stuffing the mattress? Most people have nothing extra to stuff the mattress with. You watch. Big bank collapses will start to happen soon, very soon.

And those with their money in these banks? They will be the last to know, because these big bank corporate presidents and their buddies will make sure they get their bonuses first.



[edit on 21-8-2008 by Manasseh]

It really depends on what the banks loans are. If they are mortgages in California, then yeah......really risky. But if they are commercial real estate in Chicago - not so risky.

Read the financials of the bank if you want to know the kind of risks to which they are exposed.

If the entire economy is in trouble, I don't think the difference in location or the difference in commercial or residential loans makes that big of a difference

More banks are likely to fail before the financial sector recovers, market pros say, which is creating a cautionary environment for both investors and consumers.

Oliver Quillia for CNBC.com
The New York Stock Exchange, downtown New York City.

With the housing rescue package that made its way through Congress last week aimed primarily at mortgage giants Fannie Mae and Freddie Mac, the rest of the industry will essentially be left to fend for itself amid a largely dour outlook for consumers and the economy.

www.cnbc.com...

Besides, getting a bank to tell you if they are in trouble would be a great feat, now wouldn't it

And the regulators don't want to alarm people, because then there would be a run on banks.

Have you taken a look at the M3 figures lately?

I'm surprised we haven't heard much in the news about this but as of March 23rd 2006 the government will no longer be publishing the M3 money supply data. Most people probably say "Who Cares?" Right?

But you should care! And here's why:

"The Federal Reserve tracks and publishes the money supply measured three different ways-- M1, M2, and M3.
...
In other words, M3 tracks what the big boys are doing with the money. This includes US dollars held in banks in Canada and the UK (called Eurodollars) not to be confused with the Euro which is the standard currency of Europe.

www.inflationdata.com...

The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.

Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.

www.telegraph.co.uk.../money/2008/08/19/cnusecon119.xml

The Federal Reserve is cutting the money circulation, just like they did in the great depression.

This is all a planned economic collapse, coming to a bank near you.



[edit on 21-8-2008 by Manasseh]

Only little known to those who haven't taken an interest in the past years "credit crisis" till now. It's one of the things I watch in regards to what institutions are most likely to fail.