Analysts Say More Banks Will Fail

by Louise StoryMonday, July 14, 2008

As home prices continue to decline and loan defaults mount, federal regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?

The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.
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But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”
Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation’s largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.

Now, as the Bush administration grapples with the crisis at the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation’s largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.
But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans. Most of these banks are far smaller than the industry giants that have drawn so much scrutiny from regulators and investors.
Still, only six lenders have failed so far this year, including IndyMac. In 1994, the Federal Deposit Insurance Corporation listed 575 banks that it considered to be troubled. As of this spring, the agency was worried about just 90 banks. That number may go up in August, when the government releases an updated list.
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“Failed banks are a lagging indicator, not a leading indicator,” said William Isaac, who was chairman of the F.D.I.C. in the early 1980s and is now the chairman of the Secura Group, a finance consulting firm in Virginia. “So you will see more troubled, more failed banks this year.”
And yet IndyMac, one of the nation’s largest mortgage lenders, was not on the government’s troubled bank list this spring — an indication that other troubled banks may be below the radar.
The F.D.I.C. has $53 billion set aside to reimburse consumers for deposits lost at failed banks. IndyMac will eat up $4 billion to $8 billion of that fund, the agency estimates, and that could force it to raise more money from the banks that it insures.
The agency does not disclose which banks it thinks are troubled. But analysts are circulating their own lists, and short sellers — investors who bet against stocks — are piling on. In recent weeks, the share prices of some regional banks, like the BankUnited Financial Corporation, in Florida, and the Downey Financial Corporation, in California, have stumbled hard amid concern about their financial health. A BankUnited spokeswoman said the lender had largely avoided risky subprime loans.

In his “Who Is Next?” report over the weekend, Mr. Bove listed the fraction of loans at banks that are nonperforming, meaning, for example, that the assets have been foreclosed on or that payments are 90 days past due. He came up with what he called a danger zone, which was a percentage above 5 percent. Seven banks fell in this category.
An important issue for the regional and community banks will be whether they have managed to sell their riskiest loans to Wall Street firms.

And the government may have fewer failures than in the past because private investment funds might buy some troubled lenders. Regulators are considering rule changes that would allow private equity firms to buy larger shares of banks, and several prominent investors, like Wilbur Ross, have raised funds to leap in.
Eric Dash contributed reporting.

Khmer villager's house

Phteah Pet, Sombo district, Kratie province

Phteah Rong Dol, Angkorban village, Kong Meas district, Kompong Cham province
Phteah Rong Dol, Aragn Sakor village, Siem Reap district, Siem Reap province Phteah Pet, Kob Samrong village, Kompong Siem district, Kompong Cham Province (1904-1927)

Phteah Rong, Svay village, Srei Santhor district, Kompong Cham
Phteah Pet, Salpreuk Pagoda, Chlong district, Kratie province
Phteah Rong, Oudong district, Kompong Speu province
Phteah Rong Deoung, Preak bra village, Phnom Penh city
Phteah Rong Doeung, Slaket village, Battambang province
Phteah Rong or Kantang, Phteah Kandal village, Srei Santhor district, Kompong Cham province

Sweet Sticky Rice With Mango

Prep time 10 Min, Cook time 20 Min, Ready in 1 Hr 30 Min
Servings & Scaling for 8 people

INGREDIENTS
1 1/2 cups uncooked short-grain white rice
2 cups water
1 1/2 cups coconut milk
1 cup white sugar
1/2 teaspoon salt
1/2 cup coconut milk
1 tablespoon white sugar
1/4 teaspoon salt
1 tablespoon tapioca starch
3 mangos, peeled and sliced
1 tablespoon toasted sesame seeds

DIRECTIONS

1. Combine the rice and water in a saucepan; bring to a boil; cover and reduce heat to low. Simmer until water is absorbed, 15 to 20 minutes.
2. While the rice cooks, mix together 1 1/2 cups coconut milk, 1 cup sugar, and 1/2 teaspoon salt in a saucepan over medium heat; bring to a boil; remove from heat and set aside. Stir the cooked rice into the coconut milk mixture; cover. Allow to cool for 1 hour.
3. Make a sauce by mixing together 1/2 cup coconut milk, 1 tablespoon sugar, 1/4 teaspoon salt, and the tapioca starch in a saucepan; bring to a boil.
4. Place the sticky rice on a serving dish. Arrange the mangos on top of the rice. Pour the sauce over the mangos and rice. Sprinkle with sesame seeds.

Wonton Soup

Prep time 10 Min, Cook time 15 Min, Ready in 25 Min
Servings & Scaling for 8 people

INGREDIENTS
· 1/2 pound boneless pork loin, coarsely chopped
· 2 ounces peeled shrimp, finely chopped
· 1 teaspoon brown sugar
· 1 tablespoon Chinese rice wine
· 1 tablespoon light soy sauce
· 1 teaspoon finely chopped green onion
· 1 teaspoon chopped fresh ginger root
· 24 (3.5 inch square) wonton wrappers
· 3 cups chicken stock
· 1/8 cup finely chopped green onion

DIRECTIONS

1. In a large bowl, combine pork, shrimp, sugar, wine, soy sauce, 1 teaspoon chopped green onion and ginger. Blend well, and let stand for 25 to 30 minutes.
2. Place about one teaspoon of the filling at the center of each wonton skin. Moisten all 4 edges of wonton wrapper with water, then pull the top corner down to the bottom, folding the wrapper over the filling to make a triangle. Press edges firmly to make a seal. Bring left and right corners together above the filling. Overlap the tips of these corners, moisten with water and press together. Continue until all wrappers are used.
3. FOR SOUP: Bring the chicken stock to a rolling boil. Drop wontons in, and cook for 5 minutes. Garnish with chopped green onion, and serve.

Notes

Uncooked wontons will keep in freezer for a good 2 months if well wrapped. Thaw before frying, but they can be boiled straight from frozen and cooked 2 minutes longer.)
TO FRY: Heat 2 to 3 cups of oil in a wok until hot. Deep-fry wontons in batches until golden, 2 to 3 minutes on each side. Drain. Serve with dipping sauce or duck sauce, also called plum sauce.

Grilled Salmon

Prep time 10 Min, Cook time 15 Min, Ready in 25 Min
Servings & Scaling for 4 people
INGREDIENTS
· 2 pounds salmon fillets
· 1/2 cup vegetable oil
· 1/2 cup lemon juice
· 4 green onions, thinly sliced
· 3 tablespoons minced fresh parsley
· 1 1/2 teaspoons minced fresh rosemary
· 1/2 teaspoon salt
· 1/8 teaspoon pepper

DIRECTIONS

1. Place salmon in shallow dish. Combine remaining ingredients and mix well. Set aside 1/4 cup for basting; pour the rest over the salmon. Cover and refrigerate for 30 minutes. Drain, discarding marinade. Grill salmon over medium coals, skin side down, for 15-20 minutes or until fish flakes easily with a fork. Baste occasionally with reserved marinade.

Caramelized Beef Skewers

Prep Time 10 Min., Ready in 26 Min.
Serving and scaling for ten people


INGREDIENTS
· 2-1/2 pounds beef sirloin steak, thinly sliced
· 140 cups A.1. Original Steak Sauce, divided
· 1/2 cup and 2 tablespoons KRAFT Original Barbecue Sauce
· 2-1/2 teaspoons GREY POUPON Dijon Mustard


DIRECTIONS

1. Toss steak with 2 tablespoon of the steak sauce; let stand 10 minutes to marinate. Meanwhile, combine remaining 2 tablespoon steak sauce, the barbecue sauce and mustard; set aside.


2. Preheat grill to medium-high heat. Thread steak onto eight long soaked wooden or metal skewers.


3. Grill skewers 6 minutes or until steak is cooked through, turning after 3 minutes and brushing generously with the barbecue sauce mixture.

Chinese Chicken Fried Rice II

PREP TIME 5 Min
COOK TIME 10 Min
READY IN 15 Min

SERVINGS & SCALING
Original recipe yield: 2 to 4 servings



INGREDIENTS

• 1 egg
• 1 tablespoon water
• 1 tablespoon butter
• 1 tablespoon vegetable oil
• 1 onion, chopped
• 2 cups cooked white rice, cold
• 2 tablespoons soy sauce
• 1 teaspoon ground black pepper
• 1 cup cooked, chopped chicken meat

DIRECTIONS

1. In a small bowl, beat egg with water. Melt butter in a large skillet over medium low heat. Add egg and leave flat for 1 to 2 minutes. Remove from skillet and cut into shreds.
2. Heat oil in same skillet; add onion and saute until soft. Then add rice, soy sauce, pepper and chicken. Stir fry together for about 5 minutes, then stir in egg. Serve hot.

Chinese Roast Pork

SERVINGS & SCALING
Original recipe yield: 8 to 10 servings

INGREDIENTS
- 4 pounds bone-in pork roast
- 3/4 cup soy sauce
- 1/2 cup dry sherry
- 1/3 cup honey
- 2 cloves garlic, minced
- 1/2 teaspoon ground ginger
- 1 tablespoon cornstarch
- 1 tablespoon water

DIRECTIONS

1. To Marinate: Pierce meaty sides of meat with fork; place roast in a large plastic bag. In a medium bowl combine the soy sauce, sherry, honey, garlic and ginger. Mix well and pour mixture into bag with pork. Press air out of the bag and tie securely. Refrigerate at least 8 hours or overnight, turning bag over occasionally.
2. Preheat oven to 325 degrees F (165 degrees C).
3. Remove roast and marinade from refrigerator. Reserving marinade, remove roast and place in a 9x13 inch baking dish. Roast in the preheated oven for 1 hour. Brush with reserved marinade; cover loosely with foil and roast for an additional 1 1/2 hours (or until internal temperature has reached 160 degrees F/70 degrees C), brushing several times with marinade.
4. Remove roast from oven and let stand 15 minutes. Combine pan drippings with remaining marinade. In a small bowl combine cornstarch with cold water, mix together and add mixture to marinade. Boil marinade mixture for 4 to 5 minutes, or until mixture thickens. Serve with roast.

Chili-Lime Chicken Kabobs

PREP TIME
15 Min
COOK TIME
15 Min
READY IN
1 Hr 30 Min

INGREDIENTS
3 tablespoons olive oil
1 1/2 tablespoons red wine vinegar
1 lime, juiced
1 teaspoon chili powder
1/2 teaspoon paprika
1/2 teaspoon onion powder
1/2 teaspoon garlic powder
cayenne pepper to taste
salt and freshly ground black pepper to taste
1 pound skinless, boneless chicken breast halves - cut into 1 1/2 inch pieces
skewers

DIRECTIONS
1-In a small bowl, whisk together the olive oil, vinegar, and lime juice. Season with chili powder, paprika, onion powder, garlic powder, cayenne pepper, salt, and black pepper. Place the chicken in a shallow baking dish with the sauce, and stir to coat. Cover, and marinate in the refrigerator at least 1 hour.

2-Preheat the grill for medium-high heat. Thread chicken onto skewers, and discard marinade.

3-Lightly oil the grill grate. Grill skewers for 10 to 15 minutes, or until the chicken juices run clear.