Washington | Rebel Traders - Stock Market and Economic Analysis

Washington State Governor Announces Possible Budget Cuts

August 12, 2010 By Chuck Leave a Comment

Washington State Governor Chris Gregoire announces today that revenues have fallen over the past two months, possibly requiring more budget cuts for the state.

For Immediate Release: August 12, 2010

OLYMPIA – Gov. Chris Gregoire today announced steps to address a potential shortfall in the current state budget and directed agencies to prepare for the expected budget gap in the 2011-13 biennium.

“Thanks to the incredible hard work of Washington state’s delegation, especially Sen. Murray, we dodged a bullet and have avoided across the board cuts for now,” said Gregoire. “But our state budget remains under stress. To be fiscally responsible, we must transform the way we provide services and take action now to prepare for potential shortfalls.”

Due to legislation passed by Congress this week to send emergency state aid to states, including Washington, the need for any drastic cuts to be taken immediately was narrowly averted. In addition, agency and department savings from across all of state government implemented last year has yielded $89 million in savings to the state budget. Over the last three years, the state has cut $5.1 billion in state spending. This has come in the form of service reductions, facility closures and the laying off of thousands of public employees.

Over the last two months however, revenue collections have been $125 million below expected amounts and the state today has an ending fund balance of $72 million for the 2009-11 biennium. If the upcoming September forecast or a later revenue report comes in less than expected, the state could be faced with a shortfall that eliminates the ending fund balance, which would necessitate further action, likely across the board cuts.

The state is also currently projected to face a $3 billion deficit for the next two year budget.

To prepare for the upcoming two-year budget and be ready for any immediate action that needs to be taken to correct the current budget, Gregoire today announced that she would direct state agencies to:

• Prepare reductions of 4-7 percent for the possibility of across the board cuts starting October 1st if the next forecast or revenue receipts are lower than expected.

• Prepare budget reductions for a supplemental budget for the last six months of the current biennium equal to $500 million statewide to be passed in January.

• Draft 2011-2013 budgets to prepare for the expected $3 billion shortfall which will require a 10 percent reduction in the expected general fund budget. {…} (Governors Office)

A 4 to 7% cuts across the board means only one thing, more layoffs. Does this mean Washington D.C. will have to come up with yet another state bailout package?

Mr. Brown Heads to Washington and Wall Street is Worried

January 20, 2010 By Chuck

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.

Bank Failure: Venture Bank (Lacy, WA), 92nd Bank to Fail

September 12, 2009 By Chuck

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.

Rebel Traders - Stock Market and Economic Analysis

Washington State Governor Announces Possible Budget Cuts

For Immediate Release: August 12, 2010

Mr. Brown Heads to Washington and Wall Street is Worried

Bank Failure: Venture Bank (Lacy, WA), 92nd Bank to Fail

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