Bank Failures

State banking regulators closed two Maryland banks Friday, the first two bank failures in the state since 2010. The Maryland Commissioner of Financial Regulation shut down the Bank of the Eastern Shore in Cambridge and appointed the Federal Deposit Insurance Corporation as receiver. The FDIC created the Deposit Insurance National Bank of Eastern Shore to allow customers to access their deposits until May 25. The state financial commissioner also closed HarVest Bank of Maryland in Gaithersburg, whose deposits and other assets were acquired by Sonabank in McLean, Va. HarVest's four branches will reopen during normal business hours as Sonabank's branches.

State banking regulators closed two Maryland banks Friday, the first two bank failures in the state since 2010. The Maryland Commissioner of Financial Regulation shut down the Bank of the Eastern Shore in Cambridge and appointed the Federal Deposit Insurance Corporation as receiver. The FDIC created the Deposit Insurance National Bank of Eastern Shore to allow customers to access their deposits until May 25. The state financial commissioner also closed HarVest Bank of Maryland in Gaithersburg, whose deposits and other assets were acquired by Sonabank in McLean, Va. HarVest's four branches will reopen during normal business hours as Sonabank's branches.

Here's a nutty notion: Bank failure as a bullish stock-market indicator.Don't laugh!That's how come respected banking expert Tracy Herrick, a director and adviser of San Francisco-based Anderson Capital Management, turned bullish on the market in early January, days before the powerful rally began.He told clients in a published report to start loading up on stocks the day Bank of New England officially failed, saying that bank calamities have been a reliable buy signal in the past.Just look at the explosion in stock prices that occurred shortly after Continental Illinois Bank ran into trouble in 1984, or after the one-two punch in 1982 of Chase Manhattan's Mexico bond crisis and the flop of Oklahoma's Penn Square.

Capital Bank, National Association of Rockville has agreed to assume the deposits and buy nearly all the assets of a Pennsylvania bank that was closed by regulators Thursday, according to the Federal Deposit Insurance Corp. Pennsylvania regulators closed Public Savings Bank in Huntingdon Valley, Pa., making it the first bank failure in that state this year but the 65th in the nation, the FDIC said. Public Savings had about $45.8 million in deposits and $46.8 million in assets at the end of June.

Forget the war, the depression, bank failures, the deficit and concentrate on what really matters: our governor's state of mind.

Hull Federal Savings Bank, established in 1911 to cater to German and Polish immigrants settling in Locust Point, has been placed under federal supervision as it addresses what regulators call the thrift's "unsafe or unsound practices. " The move comes amid continuing fallout of the mortgage crisis and recession, which have contributed to 118 bank failures, three of them in Maryland. Under an agreement effective Monday, the Office of Thrift Supervision ordered Hull Federal to submit a plan to maintain adequate capital levels, revise its appraisal policy, develop a loan modification policy and revise its procedures related to establishing an adequate allowance for its loan and lease losses.

WASHINGTON -- The Federal Deposit Insurance Corp. made more money than it spent last year, for its first surplus in five years.Unofficial figures show that deposit insurance premiums were about $6 billion, while bank failures cost the agency about $5 billion. The annual surplus -- of $1 billion -- is expected to rise to about $1.5 billion this year.In a year when banks earned record profits, the FDIC reduced its problem-bank list by 25 percent, to 863. Only 120 banks, with $46 billion in assets, failed last year -- about half what the agency predicted.

Bank depositors all know they are protected up to $100,000 per account. For many, that's the only piece of security they have as they watch the banking industry writhe through wrenching losses and pending mergers.But what happens if the dwindling Bank Insurance Fund, or BIF, runs dry?"When we run out of money, we can print some more," quipped Caryl A. Austrian, a spokeswoman for the Federal Deposit Insurance Corp., the agency that oversees the insurance fund.The most recent projection from the FDIC is that the fund balance will fall to between $1 billion and $3 billion by the end of the year, depending on the size and number of bank failures in the next few months.

After years of protecting large deposits from loss in bank failures, the Federal Deposit Insurance Corp. has changed its policy, and is now frequently protecting individual and business depositors only up to the insured maximum of $100,000 for each insured account. Hundreds of bank depositors have been unpleasantly surprised by the change.In theory, uninsured bank depositors have always been at risk when a bank fails, but until this year, the losses were infrequent because the FDIC usually found another bank to take over all deposits of the failed bank.

The Treasury Department's proposals for restructuring the nation's banking system are as thick as the telephone book, so it will be a long time before Congress works its way through this legislation. That's just as well, since the task of reforming the nation's banking system is not one that should be undertaken lightly. After all, the basis for the present system, now frayed and tattered, was the rash of bank failures during the Great Depression that brought financial devastation to millions of American families.

Hull Federal Savings Bank, established in 1911 to cater to German and Polish immigrants settling in Locust Point, has been placed under federal supervision as it addresses what regulators call the thrift's "unsafe or unsound practices. " The move comes amid continuing fallout of the mortgage crisis and recession, which have contributed to 118 bank failures, three of them in Maryland. Under an agreement effective Monday, the Office of Thrift Supervision ordered Hull Federal to submit a plan to maintain adequate capital levels, revise its appraisal policy, develop a loan modification policy and revise its procedures related to establishing an adequate allowance for its loan and lease losses.

A reader took Jules Witcover to task for suggesting that the current recession can be blamed on actions by President George W. Bush ("Blaming Bush no longer works for Obama," July 14) and suggests that Democrats were also complicit. I feel strongly that the 2007 recession will always be considered George Bush's, as the 1929 Depression is still considered Herbert Hoover's even after 80 years. After all, it was the deregulation of banks by President Bush and failure to take timely action by Alan Greenspan of the Federal Reserve that allowed Wall Street to take irresponsible actions that were primary contributors to the housing and bank failures.

Two Baltimore-area banks failed Friday in the latest sign that many financial institutions are still suffering from the fallout of the mortgage crisis, even as the economy has begun to recover. Regulators closed Bay National Bank and Ideal Federal Savings Bank — both reeling from bad loans — but were able to find a buyer for only one of the community banks. Bay National's deposits have been sold to a newly created thrift, Bay Bank of Lutherville. Bay National's two branches in Lutherville and Salisbury will reopen Monday, and customer accounts will automatically be transferred to the new Bay Bank, according to the Federal Deposit Insurance Corp.

An advertisement for a low interest rate brought Colette Searol to Bradford Bank in Towson yesterday morning, where instead of hearing a pitch by bank officials detailing the deal, she received a question-and-answer sheet explaining the company's failure. Searol had planned to open an account but decided against it when she found out the rate she was looking for was no longer offered, in large part because Bradford no longer exists. "When I saw the parking lot full on a Saturday morning, and there was an employee out there with a FDIC tag, I immediately thought that this was what was going on," she said.

Starbucks to close 7 Maryland stores Starbucks Coffee Company said this week it is closing 195 stores across the country, including seven in Maryland, as consumers worried about the economy continue to cut back on luxuries such as gourmet coffee. In the Baltimore area, the Seattle-based company will close a store at Westfield Annapolis mall as well as the location at 300 N. Charles St. in downtown Baltimore. Starbucks has more than 200 stores in Maryland. Andrea K. Walker China's reserves at $1.9 trillion BEIJING : China's central bank says its foreign exchange reserves rose 16 percent year-on-year to $1.954 trillion by the end of March.

FDIC Chairwoman Sheila Bair said yesterday in Baltimore that the one step the federal government still needs to take in this financial crisis is to stop unnecessary foreclosures. And it can do so, she said, by spending about $24 billion of the bank bailout money on a program to modify troubled loans. Bair, breaking with the Treasury Department, has been advocating for a program to keep homeowners out of foreclosure by modifying the interest rate or other terms of their mortgages. As part of that, the government would guarantee a portion of the loans in case the homeowner later defaulted.

WASHINGTON -- In an ominous forecast for taxpayers, the Bush administration has quietly estimated that the dwindling federal fund that insures bank deposits is much closer to insolvency -- and a publicly financed bailout -- than had been generally thought.The administration's projections imply a continuation of bank failures into the mid-1990s and predict that the Federal Deposit Insurance Corp.'s bank insurance fund will lose $6.1 billion in the next three years, even if insurance premiums are doubled.

WASHINGTON -- The banking industry proposed yesterday a $10 billion plan to reinforce the nation's unsteady deposit insurance fund as concern grows over the government's ability to cover the increasing number of failed banks.The proposal, released by the American Bankers Association and other trade associations, calls for the borrowing of up to $10 billion to bolster the insurance fund that covers bank deposits.Critics said the plan could fall short of what is needed to replenish the insurance fund and ultimately force taxpayers to subsidize bank bailouts.

Wall Street might be in turmoil, but plastic-container manufacturer Maryland Thermoform Corp. is having a great year. Forget contraction - the Baltimore company is looking into equipment and software upgrades. The thing is, those purchases require financing. That's where Wall Street's troubles become Maryland Thermoform's problem. As major banks and investment houses fail, small businesses are finding financing harder to get - never mind if they're growing and didn't have anything to do with mortgages, credit-default swaps or any of the complex financial vehicles bringing big companies down.

Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators last night in a bid to prevent the largest bank failure in American history. Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to JPMorgan Chase. The remainder of WaMu, the nation's largest savings and loan, will be operated by the government. Shareholders and some bondholders will be wiped out. WaMu deposits are guaranteed by the Federal Deposit Insurance Corp.