FDIC Friday – Another one bites the dust

The FDIC kept its’ streak unbroken when it closed Silver Falls Bank in Oregon late Friday.  According to CNN, U.S. bank regulators closed Silver Falls Bank on Friday, the 14th U.S. bank to fail this year as the struggling economy and falling home prices take their toll on financial institutions.

The Federal Deposit Insurance Corp said Silver Falls Bank, of Silverton, Oregon, had $131.4 million in assets and $116.3 million in deposits, as of Feb. 9.

In case you’re wondering how a bank can fail when it has millions more in “assets” than it has in liabilities, the “assets” are loans they made to others.  So technically they have that money coming in, while deposits are owed to other people.

The problem is that the “assets” are mainly fictitious, as are the “assets” on the balance sheets at many US banks.  Many – or most – of them are bad loans that will never be paid back.  So the Silver Falls Bank owed depositors $116.3 million, and it couldn’t pay them back because payments on their “assets” weren’t being made on time.

In case you’re wondering, taxpayers are on the hook for “an estimated $50 million” so get ready to fork it over.

Tune in next week for the latest episode of FDIC Friday!


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