Four more small US banks were shut over the weekend, taking to 13 the number closed in the first seven weeks of the year, more than half the 25 shut in all of 2008 (but none were as big as IndyBank or the huge Washington Mutual).
With seven US banks tanking so far this month, February is already the worst month for failures since 1993.
The quartet were located in Florida, Nebraska, Illinois and Oregon. It was the most closures in a single day in 17 years.
The closures remind us of the less-than-stellar debut of the Obama economic team, and also concerns that the Obama administration will fluff another chance on Wednesday when it reveals plans to stem home foreclosures.
A day before then Obama will sign the $US787 billion stimulus package into law.
On top of this, you can add news of big losses in the Swiss, Irish and UK banking sectors during the week (Ireland is basically broke and its banks are in the process of being part-nationalised by the state).
Germany has funded yet another bank with half a billion euros in aid, and is poised to take control of the troubled Hypo Real Estate, its second biggest mortgage lender which has already accessed 52 billion euros of aid.
The move, expected to come midweek, will likely split the country’s government as it will involve expropriating the shares held by existing holders in the stricken bank. Nearly a quarter of the shares are held by private buyout group JC Flowers, which has been resisting Germany’s attempts to take control of the bank which has been on government support now for months.
The news comes amid big losses by ailing Swiss giants UBS and Credit Suisse (over $US14 billion) and news that Lloyds TSB in the US is facing 10 billion pounds in new losses from HBOS, which it took over late last year, have raised concerns about the stability of the stricken UK banking system.
And London reports say the Royal Bank of Scotland is considering a cost-cutting program that could reduce its workforce by 20,000 people.
The Sunday Times reported that the bank is looking to cut jobs and costs before the release of a report at the end of February that is expected to show another loss of STG28 billion ($A61 billion). Since April, RBS has announced plans to cut 13,000 jobs, including 3,000 in its investment banking business.
With no confidence that the US administration is in control of its banking policy, early enthusiasm over the foreclosure plan evaporated on Friday after the White House cautioned against unreasonable expectations. A number of major banks say they will continue with a moratorium on foreclosures until early next month to allow the administration to produce its plan.
After the botched release of the bank bailout plan last week, doubts remain that the administration will provide sufficient detail and certainty to reassure homeowners and finance companies that the proposal is workable.
President Obama will sign the $US787 billion economic stimulus plan in Denver on Tuesday night (Australian time).
All this news (and the confirmation that led by Germany, the European economy is now contracting faster than first thought) left investors unhappy.
In the US we have the Tuesday night deadline (our time) for the recovery plans for General Motors and Chrysler.
Expect lots of talk about possible bankruptcies, especially for GM. Chrysler might reveal a deal to involve Fiat more formally and other new shareholders with the existing owners, Cerberus and Daimler, reduced to a rump.