Who's Next? List of Troubled Banks Worries Wall Street, DC
ABC News Has Obtained Privately-Prepared Lists of Most Troubled BanksBy BRIAN ROSS, RHONDA SCHWARTZ, and JUSTIN ROOD
July 15, 2008
Banks in Colorado, Maryland, Georgia and California top privately-prepared lists of troubled banks being circulated on Wall Street and in Washington.
While the Federal Deposit Insurance Corporation (FDIC) is keeping secret its official list of 90 troubled banks, ABC News has obtained other lists prepared by several research groups and financial analysts.
The lists use versions of the so-called "Texas ratio" which compare a bank's assets and reserves to its non-performing loans, based on financial data made public by the FDIC in March.
Analysts say banks with a ratio over 100 per cent would be the most likely to fail, based on what happened to Texas savings and loans during the 1980's.
"That a fair measure," said Hal Scott, a Harvard law school professor specializing in banking law.
"It doesn't mean every one of those banks is going to become insolvent, but if you have more bad loans than assets, it's not a bad way to judge what could happen," Scott told ABC News.
One list prepared by Research Associates of America, a non-profit group in Washington, D.C. funded by labor unions, reported 10 banks with a ratio over 100. (click here to see the list)
"This is information that the FDIC essentially hides in plain sight," said Jeff Fiedler, president of Research Associates of America.
At the top of the list was ANB Financial National Association of Bentonville, AR, with a 344 ratio. The bank failed earlier this year and was later taken over by a Louisiana bank.
The Colorado Federal Savings Bank of Greenwood Village, CO, was listed as having a bad loan to asset ratio of 244.82. ......(more)
The complete piece is at:
http://abcnews.go.com/Blotter/story?id=5374205&page=1