Rebel Traders – Analysis Without The Hype

There are numerous reasons being floated in the media today to explain the sharp sell off in the equities market. Some are ridiculous, while others are meaningful. Unfortunately bubble TV pays little attention to the meaningful reasons, so let us briefly list the important ones here.

   Sovereign default concerns continue to grow for Greece and the Eastern European region.

   China has temporarily restricted banks from any further lending to control excesses in the economy. Additionally, a Chinese economist has floated the idea that China should curtail further purchases of U.S. debt.

   The U.S. dollar has risen significantly in response to the items listed above.

   Q4 earnings so far have been met with ‘sell the news’. An indication that stock prices have advanced far too much and earnings don’t substantiate the stock prices.

   Financial firms are still reporting en masse losses on loans and other credit portfolio products.

   The FHA, in an attempt to save itself from complete destruction has tightened lending criteria. A good first step for the FHA, but bad for those who were counting on more ‘easy money’ to keep the housing market afloat.

   Unemployment, unemployment, and unemployment.

   And the biggest one of all today is the Massachusetts senate election that elected Republican Scott Brown last evening.

Famed CNBC windbag Jim Cramer misinterpreted what the election of Scott Brown means. Jim Cramer claimed that the market would rally ‘huge’ today if Scott Brown were elected. The part that Mr. Cramer fails to comprehend is that Scott Brown threatens the normal way of life in Washington and he embraces the ‘tea party’ ideals of ending free money.

The ‘tea party’ movement has had lots of bad press. But that is understandable since the ‘tea party’ represents the idea of fair and balanced taxes, no bailouts for Wall Street firms who dug their own grave, and a government that actually represents the people instead of lobbyists and their interests. Any group of people that threatens the normal way of life in Washington will be singled out and made to look foolish by those who are threatened the most.

Senate elect Scott Brown says he will take to Washington the very concept that threatens the normal way of life, and that has Wall Street worried.

FOR IMMEDIATE RELEASE
September 11, 2009

Venture Bank, Lacy, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina, to assume all of the deposits of Venture Bank.

The eighteen branches of Venture Bank will reopen during normal business hours beginning tomorrow as branches of First-Citizens Bank & Trust Company. Depositors of Venture Bank will automatically become depositors of First-Citizens Bank & Trust Company. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until First-Citizens Bank & Trust Company can fully integrate the deposit records of Venture Bank.

This evening and over the weekend, depositors of Venture Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of July 28, 2009, Venture Bank had total assets of $970 million and total deposits of approximately $903 million. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank & Trust Company agreed to purchase approximately $874 million of the assets. The FDIC will retain the remaining assets for later disposition.

The FDIC and First-Citizens Bank & Trust Company entered into a loss-share transaction on approximately $715 million of Venture Bank’s assets. First-Citizens Bank & Trust Company will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today’s transaction can call the FDIC toll-free at 1-800-430-7974. The phone number will be operational this evening until 9:00 p.m., Pacific Daylight Time (PDT); on Saturday from 9:00 a.m. to 6:00 p.m., PDT; on Sunday from noon to 6:00 p.m., PDT; and thereafter from 8:00 a.m. to 8:00 p.m., PDT. Interested parties can also visit the FDIC’s Web site at http://www.fdic.gov/bank/individual/failed/venture-wa.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $298 million. First-Citizens Bank & Trust Company’s acquisition of all the deposits was the “least costly” resolution for the FDIC’s DIF compared to alternatives. Venture Bank is the 92nd FDIC-insured institution to fail in the nation this year, and the third in Washington. The last FDIC-insured institution closed in the state was Westsound Bank, Bremerton, on May 8, 2009.