From Volume 37, Issue 12 of EIR Online, Published Mar. 26, 2010

U.S. Economic/Financial News

Seven More Banks Fall by the Wayside

March 20 (EIRNS)— The banking system continues to crumble, as regulators shut down seven banks in five states yesterday, bringing to 37 the number of bank failures so far this year. The seven banks, in Alabama, Georgia, Minnesota, Utah, and Ohio, had a combined total of $3.3 billion in assets and $3.1 billion in deposits. The FDIC estimates that these failures will cost the deposit insurance fund about $1.3 billion.

While it is normal procedure for the FDIC to sell the deposits and most of the assets of failed banks to other banks, it was unable to find a buyer for the largest of yesterday's failures, Advanta Bank of Draper, Utah, with $1.6 billion in assets and $1.5 billion in deposits. FDIC checks to depositors in Advanta will start going out on Monday.

Regulators have said, reports AP, that bank failures are likely to accelerate, this year, as commercial mortgages continue to implode.

Fed Pushed Closer To Revealing Bailout Banks

March 19 (EIRNS)—For the second time, and this time, one step below the U.S. Supreme Court, "Bailout Ben" Bernanke's Federal Reserve has been ordered to release the details of its biggest bank bailout, the $2 trillion Term Asset Lending Facility (TALF). These details—about which banks and non-banks got the bailout loans, how much they got, and what "collateral" in collapsed securities the Fed took for the loans—had been demanded already in 2008, by then-New York Gov. Elliot Spitzer, who was put under FBI surveillance and then scandalized out of office soon thereafter. The same was demanded in a Freedom of Information Act (FOIA) suit by Bloomberg News and Fox News, and it is that suit which the Fed has lost again.

A panel of the Federal Second Circuit Court of Appeals (New York) this morning upheld a New York judge's ruling against the Fed, and ordered it to release the gory $2 trillion bailout details. The Fed Board must disclose documents identifying financial firms that might have collapsed without government bailout. In the case of one that did fail, Lehman Brothers, the bankruptcy court has just issued a report showing that Lehman and Timothy Geithner's New York Fed apparently colluded to use worthless collateral for Fed lending, and to commit and condone accounting fraud concerning Lehman's "liquidity position" before it blew out. Congressional hearings like those exposing similar collusion with AIG by the New York Fed, have been demanded.

The Fed had argued absurdly that it could withhold the information under an exemption that allows Federal agencies to refuse disclosure of "trade secrets" and privileged commercial or financial information. The FOIA sets forth no basis for the exemption the Board asked for, U.S. Circuit Chief Judge Dennis Jacobs wrote, in the Second Circuit opinion. The Fed would have to ask Congress to amend the FOIA—but the House of Representatives has already passed Rep. Ron Paul's (R-Tex.) bill compelling just such an audit of the Fed, as the Bloomberg/Fox suit is seeking by other means. Or, the Fed will have to get the Supreme Court to reverse the Second Circuit. Otherwise, more filthy details of the bailout crimes will soon out.

Walgreens To Reject All New Medicaid Patients in Washington

March 18 (EIRNS)—Effective April 16, Walgreens drugstores in Washington State will reject any new Medicaid patients, saying that filling their prescriptions is a money-losing proposition. The company, which operates 121 stores in the state, will continue filling Medicaid prescriptions for current patients, but could not take any more, due to the "continued reduction in reimbursement" under the state's Medicaid program, which reimburses at less than the breakeven point for 95% of brand-name medications dispensed to Medicaid patents.

Walgreens follows Bartell Drugs, which stopped taking new Medicaid patients last month at all 57 of its stores in Washington, though it still fills Medicaid prescriptions for existing customers at all but 15 of those stores. Along with Walgreens and Bartell, the Ritzville Drug Company in Adams County announced in November that it would stop participating in Medicaid.

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