Mr. Rawles,
A close personal friend of mine is a FDIC bank auditor in Illinois. This person gives the final word on whether they will close a bank or not, to put it in simple terms. I’m sorry I cannot provide you with any more credible source other than my word which is based upon our conversations, but I feel it important to share this information with you and with the readers here.
A little background: Most failed banks are essentially sold to other banks and some go into receivership. The common maneuver here is to transfer the assets and liabilities to another bank with some level of guarantee from the FDIC to help support those liabilities. This is [typically] done on a Friday evening and causes the bank to be closed perhaps the next day (Saturday) and then the bank re-opens, business as usual, on Monday. So far, there has been little panic or problems with this [modus operandi].
Now, I can’t speak for what is happening around the U.S. but my friend states that in Illinois, they are finding it more and more difficult to find banks that want to help out. That is, the banks that formerly had wanted to purchase other banks have done so and are not interested in buying any more banks. To put it bluntly, the FDIC is running out of buyers. My friend states that often times they are literally coming down to the wire to get all the transactions and contracts, etc. pertaining to the purchase completed in time to seamlessly make the transition, as it is taking longer and longer to secure a buyer.
I’m not quite certain what to make of this other than it’s quite obvious that we’ve reached a saturation point in the banking industry where they themselves can no longer purchase any more failed banks.
So how else can this information benefit the readers? I believe that we should keep an eye out for more banks going into receivership or being absorbed by the Federal Government versus being purchased by other banks. We should also watch for any prolonged transitions of one bank closing and not opening back up under a new bank for more than a couple days. These subtle indicators may be one of those much sought after cues for knowing when to put some plans into action.
Thank you for all you do. Sincerely, – Tanker
JWR Replies: Thanks for sharing that information. SurvivalBlog readers should be forewarned: 1.) The pace of bank failures in the U.S. is likely to to increase. 2.) The number of banks that will have to be directly bailed out (rather than conglomerated with little fuss) will increase. And, 3.) The risk of bank runs will also increase. The point at which bank runs occur is difficult to predict, since it is based upon subtle psychological tipping points.