The Federal Deposit Insurance Corporation (FDIC) in the United States is said to have seized three banks including Downey Saving of Minneapolis, U.S. It is the third largest bank to fail this year due to the financial crisis. Allowing borrowers to borrow more money than they can afford to pay back is the culprit. Borrowers are unable to pay back there mortgages and credit card debts, leaving the bank in complete disarray.
The company was sold of to U.S. Bancorp after losing over £675 billion on mortgages in just over a year. The move by federal regulators aimed at having U.S. Bancorp re-modifying over bad 30,000 mortgages. Downey Savings was the 10th largest bank in Silicon Valley, with 13 branches and $1.26 billion in deposits.[1]
The company was sold of to U.S. Bancorp after losing over £675 billion on mortgages in just over a year. The move by federal regulators aimed at having U.S. Bancorp re-modifying over bad 30,000 mortgages. Downey Savings was the 10th largest bank in Silicon Valley, with 13 branches and $1.26 billion in deposits.[1]
Its stock has lost over 99% of their value. But during this crisis there will be many losers and the stocks of all banks have gone down in this sharp economic downturn. It seems no one is shielded from the credit crunch and the list of failures just gets bigger and longer. Everyday there is more and more news of corporations on the brink of collapse.
Up to 22 banks have collapsed just this year in the United States alone. The decomposing real estate market has dampened bank balance sheets drastically. There are no signs of improvement and look like it will be getting worse than better in the short run. It is time for these banks to ‘grow up’, time to buckle up and assume responsibility.
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