Saturday, September 10, 2011

Magical Disappearing Money

Ticker puts his finger on a very serious problem.

As of June 30th, less than three months ago, if you believe this bank's balance sheet the institution had an excess capital position (that is, assets .vs. liabilities) of 5.96%.  That is, it had 6% more assets than liabilities and thus was (almost) within regulatory capital minimums.

Today, we are told that the FDIC is going to lose $46.9 million on this transaction.
In order for the reported balance sheet to be true the bank had to lose $16.7 million (its entire surplus) plus the $46.9 million the FDIC is now going to lose in less than three months.
That is, it had to lose $63.6 million in asset valuation in three months or about 22% of it's asset value.

Yes, well, I'm sure there's a 'splanation coming from Lucy.

And this little Floriduh bank is certainly not the only one with magical disappearing money.

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