From Volume 36, Issue 43 of EIR Online, Published Nov. 6, 2009

U.S. Economic/Financial News

The New Economic Recovery Exempts the Homeless and the Foodless

Oct. 29 (EIRNS)—An item on the BBC website today, among the articles otherwise touting the U.S. economic recovery, features scenes at a dinner distributed by church workers at a new homeless center in Bergen County, N.J.

"Sixty-two people who would otherwise be homeless live here but anyone can come in and get the free evening meal," the article reports. "Last night a hundred people came off the streets of this very affluent area, a stylish suburb of New York, to take advantage of the free food."

The article continues, "It's predicted that figures due out later today will show modest growth in the American economy. Madge and Rosemary, handing out a vast quantity of home-baked brownies and brightly-coloured cupcakes, tell a different story than the statistics. They say they are serving twice as many people as this time last year."

The manager of the center is quoted that it's not just the increased numbers, but who these people are: not just people with mental health and drug problems, but, "people who have lost their job and suddenly find they can't keep up payments on their home and a car. She says these people don't know anyone who uses the welfare system but suddenly find themselves in it. They are, she says, 'lost, confused and frightened.'"

FDIC To Seize More Banks

Oct. 30 (EIRNS)—The Federal Deposit Insurance Corp. (FDIC) seized the nine banks owned by Oak Park-based FBOP Corp, the owner of Park National Bank of Chicago and eight other U.S. banks, today.

The closing of $4.7 billion-asset Park National occurred on the same day that Park National Bank Initiatives, the bank's community development unit, received $50 million from Treasury Secretary Timothy Geithner in a ceremony in Chicago.

U.S. Bancorp of Minneapolis is expected to take over most of the operations of FBOP's banks.

The FDIC was also expected to take over the Los Angeles-based California National Bank in what would mark the fourth-largest bank failure in the country this year, according to the Los Angeles Times.

Besides the Park National Bank and the California National Bank, six other banks owned by FBOP were seized by regulators and acquired by U.S. Bancorp. They include San Diego National Bank, with 28 offices, and San Francisco's Pacific National Bank, which has 17.

California National, with $7.1 billion in assets and $5.6 billion in deposits as of June 30, is the fourth-largest commercial bank based in Los Angeles County. Only City National Corp., East West Bancorp and Cathay General Bancorp are larger.

Before today, 106 banks had failed this year.

California National has had its share of lending problems. As of June 30, the last time it reported its financial results publicly, the bank had five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier.

Meanwhile, today, the Federal Reserve, the Office of the Comptroller of the Currency, the FDIC, and the Office of Thrift Supervision issued a guidance warning that many smaller banks which built up heavy concentrations of commercial loans, viewing it as an area in which they could compete with larger banks, face increasing failures.

As of June, commercial real estate loans totaled more than $1 trillion, or 14.2% of all loans and leases in the banking industry. Prices for existing commercial properties have fallen 35% to 40% since peaking in 2007.

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