Two More Friday Failures-One With An Ominous Note

A couple of Friday failures from the WSJ.

First Security Pacific Bank in LA was seized and the deposits sold to Pacific Western Bank. It was a piddling little bank and the loss to the FDIC is supposed to be about $200 million. That amount of money doesn’t get above ground clutter on the radar anymore.

The other is a bit bigger and it has a famous chairman. Franklin Bank a $5.1 billion bank base in Houston was taken over. The $3.7 billion in assets and $850 million in assets were sold to Prosperity Bank. The FDIC estimates (if you believe them) are for a loss of $1.4 to $1.6 billion. Now we’re back in Washington type numbers! The kicker here is that Lewis Ranieri, the chairman of Franklin, was one of the pioneers of mortgage backed securities.

What puzzles me is how in the world do you tank a bank in Texas? That state has one of the only good economies on the planet. You can get rich just walking through Houston and picking up the money falling out of everyone’s pockets. Or maybe this tale tells us that this whole thing is completely out of control.

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