FDIC

h/t Ryan McFarland

The FDIC seized 3 more banks yesterday — First National Bank of Anthony KS, Cooperative Bank of Wilmington NC, and Southern Community Bank of Fayetteville GA — bringing the total for the year to 40.

On each of those press releases, there’s a figure at the bottom for the expected cost to the FDIC’s Deposit Insurance Fund for taking control of and disposing of the bank (selling it to another institution, shutting it down completely, or selling part of it and shutting down the rest). The seizure of these 40 banks, by the FDIC’s estimation, will cost them more $11 billion once everything has been processed.

And it’s not like there aren’t going to be any more seizures coming.

The story with First National is typical of many of these institutions. As the real estate market in Johnson County KS (home to various high end suburbs of Kansas City MO) boomed, First National wanted in on the action and expanded into the area.

Johnson County is an area defined by "move up buyers" chasing the bigger-is-better aspect of the American Dream, and all across the country those move up buyers have all but disappeared. Current owners can no longer afford their homes — unemployment is still rising in that part of the KC area — and there are few buyers around either for the owners before they default on their mortgages or the banks afterwords. As a result, that means just one thing: First National was left holding a lot of non-performing loans. Well, actually two things: we’re on the hook for the $32 million or so it will take to clean up the mess at First National.

And the health care mess is only going to make things worse. Premiums to businesses are expected to rise by 9% next year, and more of this will be pushed on to employees, further depressing net wages and adding even more pressure to already stressed household budgets in places like Johnson County. But there’s an interesting little tidbit at the bottom of that piece:

The national trends suggest that most employers and employees will pay far more than those in the purchasing pool run by the California Public Employees’ Retirement System. The pension fund approved an overall 2.9 percent increase in health care premiums for members in 2010, the lowest rate increase in 14 years.

Hmmm . . . a big plan for public employees does the best at holding down premium increases? Almost makes you think that perhaps putting together a big plan that does the same for the general public might be worth looking into (unlike, say, this approach).

Oh, and along with a health care system that doesn’t suck, I want a pony.

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