| US thrifts lost $5.4 billion in second quarter; set aside record $14 billion for problem loans
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Home | Business
US thrifts lost $5.4 billion in second quarter; set aside record $14 billion for problem loans
By MARCY GORDON , Associated Press
Last update: August 27, 2008 - 12:38 PM
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One question:
Where did the thrifts get the $14 billion they set aside for problem loans? (betcha they borrowed it from the federal reserve)
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WASHINGTON - U.S. thrifts lost $5.4 billion in the second quarter and set aside a record amount to cover losses from bad mortgages and other loans.
Data from the U.S. Office of Thrift Supervision released Wednesday show federally-insured savings and loan institutions posted their second-largest quarterly Find Loans To Buy A House loss ever in the April-June period, after the what are arm loans $8.8 billion loss in the fourth quarter of last year. alabama construction loans Heavily focused on mortgage lending, thrifts have been stung by mounting home-loan defaults.
The home loans for disabled $5.4 billion quarterly loss compared with net profits of $3.8 billion in the year-ago period, and a loss of $627 million in the first quarter.
The 829 thrifts also set aside a record $14 billion to cover losses from bad mortgages and other loans.
John Reich, the thrift agency's director, said 98 percent of institutions still have adequate capital to weather the housing and economic turbulence.
"I look for glimmers of hope," no rejection auto loans Reich said at a news briefing. "The glimmer of hope here is that the industry department of education student loans as a whole is structurally profitable."
The slump in the home loans for poor credit housing market and credit-market tumult will eventually turn around after the cycle — which now appears to be at its midpoint — is exhausted, Reich said.
Reich and other banking regulators have been pointing Student Loans With Low Interest out differences between the current situation and the savings and loan crisis of the late 1980s and early 1990s, citing banks' stronger capital positions and a fatter federal deposit insurance fund.
The report from the agency, a division of the Treasury Department, came a day after the Federal chase automotive loans Deposit Insurance Corp. American Occupational Therpy Foundation Loans For said the number of troubled banks and thrifts jumped to 117 — the highest level since mid-2003. The FDIC also said profits earned by banks and savings and loans plunged by 86 percent in the second quarter, to $5 billion.
The thrift agency said its number of problem institutions grew to 17 at the end of the second quarter from 10 a year earlier.
The agency said the amount that savings associations set aside for problem loans soared in the second quarter to 3.68 percent of average assets from 0.38 percent a year earlier.
Thrifts differ from banks in that, by law, they must have at least 65 percent of their lending in mortgages and other consumer loans — countywide home loans making them particularly vulnerable to the persistent housing downturn. The institutions regulated by the Office of Thrift Supervision range in size from big lenders like Seattle-based Washington Mutual Inc. and Sovereign Bancorp Inc. of sheffield loans Philadelphia to small community banks.
Shares of Washington Mutual home loans in ct dipped 4 cents to $3.55 in afternoon trading, while Sovereign Bancorp added 18 cents to $8.79.
As a fast personal loans next day percentage of total assets, thrifts' troubled assets rose to the highest level since the early 1990s, the final years of the savings and loan crisis. They came in at 2.68 percent advance payday loans palm coast fl of assets for the quarter, up from 0.95 percent in the year-ago period.
Like banks, thrifts are being closely examined by federal inspectors for signs of heavy exposure to declining markets or troubled areas such as construction and real estate loans.
The largest bank failure in years occurred in July and involved a thrift. Pasadena, Calif.-based IndyMac Bank was the biggest cash cow title loans regulated thrift to fail and the second-largest financial institution to close in U.S. history, after Continental Illinois National Bank in homeowner loans 1984. It was taken over by the FDIC with about $32 billion in assets and deposits of $19 billion.
IndyMac succumbed to the pressures weighing on institutions of all sizes nationwide: tighter credit, tumbling home prices and rising foreclosures.
Eight other FDIC-insured banks have failed so far this year, compared with three in all of 2007, and more are expected to collapse this American Samoa Home Loans year.
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