Comments on Fund My Mutual Fund: Heads We Win; Tails We Win

I agree on the short sightedness problem and havin...

2008-09-28T19:59:00.000-04:00

I agree on the short sightedness problem and having worked at public companies I see it every quarter - the panic and desperation and "pull out all the stops" to make the quarter even if it damages the long term strength of the company.

But how you change that is beyond me. The investor populace drives that - if you are off by 1 cent in this new investing world of the past decade your stock can lose 30%. So just like parents of kids on sports teams who complain about the issues - I'd point at the parents and say "your expectations" are the issue. Same with the market system here.

If not for capital raising via equity and the ability to get "rich quick" for insiders - I would never see a reason to be public. You build a business looking 20 years out, not 90 days. But that's the pull tug between a business and a stock.

Mark,I agree with you (and Carl Icahn) the board s...

2008-09-28T17:14:00.000-04:00

Mark,

I agree with you (and Carl Icahn) the board system is busted. What I don't agree with is the government setting salaries.

I see the problem as much bigger than CEO salaries. It's only one symptom of many that have come out of the 'I want it now!' mentality of todays gambling...err investing. Companies are managed quarter to quarter (heck, sometimes even shorter now) often to the detriment of the long term future of the company. What we need to do is tie the CxOs salaries to the long term success of the company. If we can manage that, I believe a lot of our current problems wouldn't have happened and many issues would just fix themselves.

It's a supreme example of the "Peter Principal" at...

2008-09-28T16:27:00.000-04:00

It's a supreme example of the "Peter Principal" at work.. On the face of it, a salary tied to performance would appear to be valid approach... But having seen CEOs in companies that I've worked for screw the departments just so their numbers look good that year (just before the retire or leave the Company) resulting in ugly situations the following year, I don't see any good replacement system.

jegan

Michael,Questions to askWho nominates the board me...

2008-09-28T14:20:00.000-04:00

Michael,

Questions to ask

Who nominates the board members?
Who in America is usually Chairman of the Board?
I realize the shareholders vote in our out, but how many cases do you see a shareholder base going against a nominated board member? 1%? 0.5%? 0.001%?
Who sits on most boards? C-level executives from other companies in most cases. Disney had a hilarious situation a few years ago I read in BusinessWeek - basically half the board was just personal friends of CEO. Where were the "shareholders" to fight that?
Board is supposed to look out for shareholders, not be a rubber stamp for CEO
How many board nominations do you see struck down by shareholders?
Shareholders nowadays being mostly institutions - i.e. mutual funds
Why would a mutual fund want to get involved in a mess like that?

I read a few years ago that Germany had a rule that CEO could be made at most 7x the median wage of worker
Questions - how does Germany survive such a punitive system? I mean their "best and brightest" are obviously leaving the country in droves to strike it rich elsewhere right? Somehow Germany is the largest exporter in the world. Hmm...

I have a difference in thought on original founders versus what I call babysitter CEOs. If you found a company and take risks yourself than I don't mind the pay - MSFT, GOOG, whomever founded railroads, or steel companies or the like. But the 2nd, 3rd, 4th generation CEOs who sit there and collect large paychecks when the company looks very much the same as it did 10 years ago and very much the same as it will in 10 years is just a joke of the system.

There is no hard and fast rule but I wonder how many CEOs would up and quit and say "this system is ridiculous and I refuse to work for this salary" if we said 50x median worker is the most they could get. I mean they sure won't be going to Germany. Those suckers would still be paid 8x less.

Even Carl Icahn says the board system is a complete joke. He has been fighting boards for 3-4 decades. He sees what a foxes watching the henhouse system it is.

I'm not so sure compensation needs to be regulated...

2008-09-28T11:27:00.000-04:00

I'm not so sure compensation needs to be regulated as much as power needs to be given back to the shareholders. Boards in general have too much power and shareholders have too little. If the shareholders vote and okay a huge pay package for a CEO, then that's fine. It's what the owners of the company decided.

If they must 'regulate' pay, the best they can probably do is set up some ratio where the CxOs can only be paid X times more than the lowest paid person in the company, else they get taxed more.

Proposed $700 Billion Bailout IsToo Little, Too La...

2008-09-28T10:00:00.000-04:00

Proposed $700 Billion Bailout Is
Too Little, Too Late to End the Debt Crisis;
Too Much, Too Soon for the U.S. Bond Market
Submitted by
Martin D. Weiss, Ph.D. and Michael D. Larson
Weiss Research, Inc.
to
United States Congress
Senate Banking Committee
and House Financial Services Committee
September 25, 2008
Weiss Research, Inc. 2
Copyright © 2008 by Weiss Research
15430 Endeavour Drive
Jupiter, FL 33478
Martin D. Weiss, Ph.D., founder and chief executive officer of Weiss Research, Inc., is a
leading advocate for investor safety, helping thousands of investors judge the financial
safety of their investments. He holds a bachelor’s degree from New York University and
a Ph.D. from Columbia University. Dr. Weiss has testified before Congress many times,
providing constructive proposals for reform in the financial industry.
Michael D. Larson, Weiss Research’s interest rate and real estate analyst, was among the
first analysts to forecast the housing and mortgage crisis in 2004, and his July 2007
policy paper, “How Federal Regulators, Lenders and Wall Street Created America’s
Housing Crisis: Nine Proposals for a Long-Term Recovery,” accurately predicted the
deep and broad impact of the mortgage crisis on the broader economy that the nation
faces today. Mr. Larson holds B.S. and B.A. degrees from Boston University.
Weiss Research is an independent investment research firm. Founded in 1971, the firm is
one of the nation’s leading research and analysis firms for investors, providing
information and tools to help them make sound financial decisions. Its flagship
publication, Money and Markets, is a daily investment e-letter offering the latest news
and financial insights for investors.
Weiss Research, Inc. 3
Executive Summary
New data and analysis demonstrate that the proposal before Congress for a $700
billion financial industry bailout is too little, too late to end the massive U.S. debt
crisis; and, at the same time, too much, too soon for the U.S. Government bond
market where most of the funds would have to be raised.
I. Too Little, Too Late to End the Debt Crisis. Congress should
1. Disregard data based on the list of troubled banks maintained by the Federal
Deposit Insurance Corporation (FDIC). The FDIC’s list currently has 117
institutions with $78 billion in assets. However, based on a broader analysis of
recent FDIC call report data, we find that institutions at risk of failure include
1,479 FDIC member banks and 158 thrifts with total assets of $3.2 trillion, or
41 times the assets of banks on the FDIC’s list.
2. Think twice before providing a broad bailout for U.S. debts given the wide
diversity of mortgage holders and the great magnitude of the total debts
outstanding in the United States. Just-released Federal Reserve Flow of Funds
data show that, beyond mortgages, there are another $20.4 trillion in privatesector
consumer and corporate debts, plus $2.7 trillion in municipal securities
outstanding.
3. Recognize that, among banks and thrifts with $5 billion or more in assets, there
are 61 banks and 25 thrifts that are heavily exposed to nonperforming
mortgages.
4. Get a better handle on the enormous build-up of derivatives held by U.S.
commercial banks.
5. Base any legislation on (a) realistic estimates of the loan amounts already
delinquent or in default, and (b) reasonable forecasts of how many more are
likely to go bad in a continuing recession.
6. Recognize the inadequacies in already-established safety nets, such as the
FDIC for bank depositors, Securities Investor Protection Corporation (SIPC)
for brokerage customers, and state guarantee associations for insurance
policyholders.
There should be no illusion that the $700 billion estimate proposed by the
Administration will be enough to end the debt crisis. It could very well be just a
drop in the bucket.
Weiss Research, Inc. 4
II. Too Much, Too Soon for the U.S. Bond Market. There should also be no
illusion that the market for U.S. government securities can absorb the additional
burden of a $700 billion bailout without putting dramatic upward pressure on U.S.
interest rates.
The Office of Management and Budget (OMB) projects the 2009 federal deficit
will rise to $482 billion. But adding the cost of announced and proposed bailouts,
now approximately $1 trillion, it is undeniable that the federal deficit could double
or triple in a short period of time, driving interest rates sharply higher and
aggravating the very debt crisis that the bailout plan seeks to alleviate.
III. Policy Recommendations to Congress
1. Congress should limit and reduce the funds allocated to any bailout as much as
possible, focusing primarily on our recommendation #4 below.
2. If Congress is determined to provide substantial sums to a new government
agency to buy up bad private-sector debts, we recommend that the new agency pay
strictly fair market value for those debts, including a substantial discount that
reflects their poor liquidity.
3. Congress should clearly disclose to the public that there are significant risks in
the financial system that the government is not able to address.
4. Rather than protecting imprudent institutions and speculators, Congress should
protect prudent individuals and savers by strengthening existing safety nets,
including the FDIC for bank deposits, SIPC for brokerage accounts and state
guarantee associations that cover insurance policies.
IV. Recommendations to Savers and Investors
Regardless of what Congress decides, savers and investors should continue to
invest and save prudently, seeking the safest havens for their money, such as
banks with a financial strength rating of B+ or better, U.S. Treasury bills, and
money market funds that invest almost exclusively in short-term U.S. Treasury
securities or equivalent.
Weiss Research, Inc. 5
Proposed $700 Billion Bailout Is
Too Little, Too Late for the Debt Crisis;
Too Much, Too Soon for the U.S. Bond Market
Martin D. Weiss, Ph.D. and Michael D. Larson
On September 18, 2008, the President, the Treasury Secretary and the Federal
Reserve Chairman proposed a sweeping plan to bail out financial institutions, get
to the root of the debt crisis afflicting the U.S. economy and put it to an end,
requesting that Congress authorize approximately $700 billion in federal funding.
In addition, Congress is seriously considering expanding the bailout to include a
wide variety of credit sectors beyond mortgages.
In an earlier white paper, How Federal Regulators, Lenders, and Wall Street
Created America’s Housing Crisis — Nine Proposals for a Long-Term Recovery,
we demonstrated that the debt crisis was far larger, more widespread, and more
dangerous than most believed at the time.1 Similarly, in this paper, we demonstrate
that the proposed bailout is
􀂃 too little, too late to repair the massive U.S. debt crisis; and, at the same time,
􀂃 too much, too soon for the U.S. Government securities markets, where most of
the funds would have to be raised.
I. Too Little, Too Late to End the Debt Crisis
To better understand the magnitude of the debt crisis, we urge Congress to
complete a thorough review of the data, as follows:
First and foremost, we believe Congress should disregard data based on the list of
troubled banks maintained by the Federal Deposit Insurance Corporation (FDIC).
The FDIC’s list has 117 institutions with $78 billion in assets. But given the
current proposal for a $700 billion bailout, it is clear that Administration officials
tacitly recognize that the FDIC list understates the problem. There are many more
financial institutions at risk or in need of assistance with their toxic paper.
We believe a more accurate count of problem banks can be derived from our
analysis of: (a) the derivative risks assumed by major banks, (b) the mortgage
holdings of the largest regional banks and (c) all banks and thrifts with
1 How Federal Regulators, Lenders, and Wall Street Created America’s Housing Crisis — Nine Proposals
for a Long-Term Recovery, http://www.weissgroupinc.com/whitepaper1/
Weiss Research, Inc. 6
TheStreet.com’s Financial Strength Rating of D+ (weak) or lower.2 Based on this
analysis, detailed in Appendixes A and C, we find that
􀂃 1,479 FDIC member banks are at risk of failure with total assets of $2.4 trillion.
􀂃 In addition, 158 savings and loans are at risk with $756 billion in assets.
􀂃 In sum, banks and S&Ls at risk have assets of $3.2 trillion,3 or 41 times the
assets of banks on the FDIC’s watch list.4
These numbers alone indicate that the $700 billion contemplated for the bailout
plan could be severely inadequate.
Second, we believe Congress should look beyond mortgage-backed securities held
by investors and seriously consider the data regarding nonperforming mortgages
themselves.
These data show that among institutions with $5 billion or more in total assets,
there are 61 banks and 25 thrifts that are overexposed, holding $1.50 or more in
nonperforming mortgages per dollar of risk-based capital. Thus, any attempt to
reform these mortgages, or the mortgage pools that are based upon them, is likely
to cause severe additional losses to these overexposed institutions. (See Appendix
B for listings.)
Third, Congress should think twice before providing a broad bailout for U.S. debts
given the wide diversity of mortgage holders and the great magnitude of the total
debts outstanding in the U.S., as detailed in the Federal Reserve’s Second Quarter
Flow of Funds Report.5
In this report, released on September 18, just one day before the President
announced the Administration’s $700 billion bailout proposal, the Fed estimates
that the nation’s mountain of interest-bearing debts has now grown to $51 trillion.6
Plus, it provides critical additional insights regarding the breadth of the debt
problems facing the nation, as follows:
2 TheStreet.com’s Financial Strength Ratings, formerly the Weiss Safety Ratings published by Weiss
Ratings, Inc., reflect each institution’s capital, asset quality, liquidity and other factors.
3 The $3.2 trillion in assets include the assets of Citibank NA, Wachovia Bank NA and SunTrust Bank
cited in Appendix A, plus total assets of FDIC member banks listed in Appendix C.
4 This represents a correction to a figure reported earlier.
5 Federal Reserve’s Second Quarter Flow of Funds Report,
http://www.federalreserve.gov/releases/z1/Current/z1.pdf
6 Ibid., page 60 (pdf page 68), table L4, line 1.
Weiss Research, Inc. 7
1. The ownership of residential mortgages is dispersed among many different
sectors. There are $12.1 trillion in mortgages on single- and multi-family homes
in the United States.7 But these are not held only by banks and S&Ls. They are
spread among a wide variety of institutions and individuals, all of which could
have similar claims to federal assistance, as described in items 2 through 6 below.
2. Fannie, Freddie and GSAs are still at risk. Despite the recent bailouts of
Fannie Mae and Freddie Mac, Congress must not lose sight of the fact that these
two institutions, along with U.S. government agencies (GSAs), currently hold $5.4
trillion in residential mortgages, according to the Federal Reserve.8 The fact that
these assets already enjoy a government guarantee does not prevent them from
continuing to deteriorate and requiring substantially larger funding than currently
contemplated.
3. Private sectors and local governments also own residential mortgages in
substantial quantities. The bailout plan would also have to cover:
􀂃 The issuers of asset-backed securities, now holding $2.1 trillion in mortgages,9
􀂃 Nonbank finance companies ($426 billion),10
􀂃 Credit unions ($332.4 billion),11
􀂃 State and local governments ($159 billion),12
􀂃 Life insurance companies ($61.6 billion),13 plus
􀂃 Private pension funds, government retirement funds and households
themselves.
4. Commercial mortgages are now going bad as well. The current debate tends
to focus exclusively on residential mortgages. But at many regional and superregional
banks, much of the risk is currently in the commercial mortgage sector,
where recent data denotes many of the same difficulties as the residential sector.
To truly get to the root of the problem, the Administration and Congress cannot
exclude these either.
7 Ibid., page 93 (pdf page 101), table L217, sum of line 2 and line 3.
8 Ibid., page 94 (pdf pages 102), tables L218 and L219, sum of line 17 and line 18.
9 Ibid., sum of line 19.
10 Ibid., sum of line 20.
11 Ibid., table L218, line 13.
12 Ibid., tables L218 and L219, sum of line 16.
13 Ibid., tables L218 and L219, sum of line 14.
Weiss Research, Inc. 8
There are $2.6 trillion in commercial mortgages outstanding in the United States.
As with residential mortgages, these are also dispersed widely beyond the banking
sector — $644 billion held by issuers of asset-backed securities, $263 billion held
by life insurers, $65 billion at nonbank finance companies and $37 billion at Real
Estate Investment Trusts (REITs).14
5. Mortgages are less than half the problem. Although it is true that the current
debt crisis in America originated in the mortgage market, it is not accurate to say
that the root of the crisis is strictly in this one sector. Rather, the debt crisis has
multiple and varied roots, with excessive risk-taking in credit cards, auto loans and
virtually every other form of private-sector debt.
There are currently $14.8 trillion in residential and commercial mortgages in
America. But beyond mortgages, there is another $20.4 trillion in consumer and
corporate debt. This means that mortgages represent only 42% of the privatesector
debt problem in America.
6. Local governments could be a higher priority. Overlooking the debt
problems of state and local governments could also be a mistake. Indeed, given the
essential nature of their services, including the pivotal role they play in homeland
security, it could be argued that their credit challenges take priority over those
faced by banks, S&Ls and Wall Street firms.
Currently, the Fed estimates $2.7 trillion in municipal securities outstanding,15
most of which have been reliant on a bond insurance system that remains on the
brink of collapse.16
In short, to truly get to the root of the problem as the President is requesting,
Congress’ new bailout plan would have to cover a lot of ground beyond just the
banking industry.
Fourth, we urge Congress to get a better handle on the enormous build-up of
derivatives in America, beginning with a thorough review of the OCC’s Quarterly
Report on Bank Trading and Derivatives Activities, First Quarter 2008.17
14 Ibid., page 95 (pdf page 104).
15 Ibid., page 60 (pdf page 68), table L4, line 5.
16 Money and Markets, “Ratings Collapse,” December 24, 2007,
http://www.moneyandmarkets.com/issues.aspx?Ratings-Collapse-1301; “World’s Largest Bond Insurers
Collapsing,” January 21, 2008, http://www.moneyandmarkets.com/issues.aspx?Worlds-Largest-Bond-
Insurers-Collapsing-1381; “The Collapse of the Great Ratings Scam,” March 18, 2008,
http://www.moneyandmarkets.com/issues.aspx?The-Collapse-of-the-Great-Ratings-Scam.
17 OCC’s Quarterly Report on Bank Trading and Derivatives Activities, First Quarter 2008,
http://www.occ.treas.gov/ftp/release/2008-74a.pdf
Weiss Research, Inc. 9
Although derivatives were originally designed to help reduce risk, it is widely
acknowledged that their volume and usage have reached such an extreme level
that many have become, instead, speculative bets which greatly increase the
systemic risk to financial global markets.
And although regulators have few details about these derivatives, most officials
now realize they were probably at the root of the panic that began to spread
throughout the global banking system in the wake of the Lehman Brothers
bankruptcy on September 15.
Therefore, it should be understood by all members of Congress that, to ward off
possible renewed waves of global panic, the bailout plan would also have to
address the following threats to the financial system:
􀂃 The notional (face value) amount of derivatives held by U.S. commercial
banks is $180.3 trillion.18
􀂃 One single institution, JPMorgan Chase (JPM), holds $90 trillion, or 49.9% of
all derivatives held by U.S. commercial banks, a concentration of risk that is
unprecedented in modern U.S. history.19 Therefore, any federal bailout of the
derivatives market would necessarily benefit JPMorgan Chase to a far greater
extent than any other financial institution, a pattern we have already witnessed
in the wake of the failures at Bear Stearns and Lehman Brothers.
􀂃 Although it can be argued that notional values overstate the risk, the recent
failures of Bear Stearns and Lehman Brothers, both large players in the
derivatives market, illustrates that the large counterparty default risk
underlying the $180.3 trillion in derivatives cannot be understated. Currently,
the OCC reports that the credit exposure to derivatives (risk of default by
trading partners) is $465 billion, up 159% from one year earlier.20
􀂃 U.S. banks with the greatest credit exposure to derivatives are HSBC (with
$7.21 in risk per dollar of capital), JPMorgan Chase (with $4.11 in risk on the
dollar), Citibank ($2.79), Bank of America ($2.15) and Wachovia ($.77).21 We
believe that exposure exceeding $.25 per dollar of capital is excessive.
18 Ibid., page 1.
19 Ibid., page 22, Table 1.
20 Ibid., page 1.
21 Ibid., page13, Graph 5A table.
Weiss Research, Inc. 10
􀂃 Further, after Bank of America’s merger with Merrill Lynch, which reports $4
trillion in derivatives, and after a possible merger involving Morgan Stanley,
which holds $7.1 trillion, these exposures will likely be intensified.22
Overall, Congress should debate the bailout issues with its eyes open, recognizing
that any bailout plan that does not include these banks and other players in the vast
market for derivatives could leave a gaping hole through which financial panic can
spread again.
Fifth, for all of these debts and derivatives, a bailout plan would, in normal
circumstances, require (a) realistic estimates of the amount that is already
delinquent or in default, and (b) reasonable forecasts of how many more are likely
to go bad in a continuing recession.
However, the only estimates currently available are those reflecting actual writedowns
recognized by large, global financial institutions — over $500 billion.23
That figure does not include the thousands of other institutions among the sectors
cited above. Nor does it include losses incurred but not yet properly booked — let
alone losses not yet incurred.
To date, no government agency is providing such estimates. But without them, any
budgetary planning for this bailout is next to impossible. No one will know, except
in retrospect, if the bailout truly removes the cancerous debts from the economic
body or leaves most of them to fester and spread.
Sixth, Congress should recognize the inadequacies in already-established safety
nets, giving serious consideration to the following facts:
􀂃 FDIC’s safety net for bank depositors is not adequately funded: The FDIC’s
funding, currently at $45 billion, is $32 billion less than the assets of banks on the
FDIC’s list of troubled institutions. Moreover, it represents only 1,9% of the assets of
banks and S&Ls we believe to be at risk, as stated earlier.
􀂃 SIPC’s safety net for brokerage firm customers suffers two flaws:
1. No coverage for market losses due to brokerage firm failure. In a Wall
Street meltdown scenario, it is possible that multiple brokerage firms would be
unable to continue servicing customers due to financial or operational difficulties.
And until the authorities can sort out the mess, customer accounts would be
22 Merrill Lynch and Morgan Stanley financial statements.
23 Bloomberg News, Banks' Subprime Losses Top $500 Billion on Writedowns (Update1), August 12, 2008,
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSKLfqh2qd9o&refer=worldwide.
Weiss Research, Inc. 11
frozen, denying investors the ability to liquidate their securities to prevent
portfolio losses. As SIPC is currently structured, even though the failures would
clearly be a major factor contributing to the portfolio losses, the losses would not
be covered.
2. Member assessments have been laughably small. Member firms are charged only
$150 per member firm, regardless of their size. For large firms, this is less than
the amount typically spent on paper clips.24
􀂃 Safety net of insurance policyholders cannot handle large insurance
company failures: State guarantee associations have inadequate funds to cover
policyholders in the event of the failure of several large insurers, with potentially
severe consequences for millions of savers and investors.
The experience of the early 1990s illustrates this severe weakness: Large life and
health insurers, such as Executive Life of California, First Capital Life, Fidelity
Bankers Life, and Mutual Benefit Life were taken over by state regulators. But state
guarantee associations had insufficient funding and, in many states, surviving insurers
could not afford the large amounts that would be required to cover policyholders. As
a result, the savings of two million policyholders with cash value life and annuity
policies were frozen for many months. And subsequently, those policyholders were
required to accept either (a) as little as 50 cents on the dollar in an immediate payout
or (b) replacement policies with inferior returns and terms.25
To adequately protect individual savers, investors and policyholders, each of these
safety nets will require substantial additional funding.
In sum, after carefully reviewing the above data and facts, there should be no
illusion that the $700 billion estimate proposed by the Administration will be
enough to end the debt crisis. It could very well be just a drop in the bucket.
II. Too Much, Too Soon for the U.S. Bond Market
There should also be no illusion that the market for U.S. government securities can
absorb the additional burden of funding massive government bailouts without
traumatic consequences.
In its Fiscal Year 2009 Mid-Session Review, Budget of the U.S. Government, the
Office of Management and Budget (OMB) projects the 2009 federal deficit will
rise to $482 billion. At the same time, the OMB seeks to minimize this record
24 SIPC Annual Report 2007, http://www.sipc.org/pdf/SIPC_Annual_Report_2007_FINAL.pdf, page 8.
25 See July 1991 testimony by Martin D. Weiss before the House Subcommittee on Commerce, Consumer
Protection, and Competitiveness and February 1992 testimony by Weiss before the Senate Committee on
Banking, Housing, and Urban Affairs regarding the insurance industry failures.
Weiss Research, Inc. 12
deficit by stating it will be only 3.3% of estimated GDP, which is lower than the
recent peak of 3.6% of GDP.26
However, the OMB made this projection before the recently announced or
proposed bailouts. Considering those that have come to light in the last fortnight
alone, the potential bill for the government’s largesse can be calculated as follows:
Fannie Mae and Freddie Mac $200 billion
AIG Insurance Corp. 85 billion
Financial market bailout proposal 700 billion
Total $975 billion
This bill, approaching $1 trillion, is so extreme, it is undeniable that
1. It could double or triple the federal deficit in a very short period of time.27
2. Such a dramatic increase in the deficit would drive up the cost of borrowing
not only for the U.S. Treasury, but also for other bonds and for millions of
Americans seeking a mortgage or other credit, since Treasury yields are the
benchmarks against which most borrowing is based.
3. To the degree that the Federal Reserve purchases U.S. government
securities for its own account to help support bond prices, it would devalue
the U.S. dollar, risking a dollar collapse and the flight of much-needed
foreign capital from the U.S.
4. Ultimately, either of these outcomes — sharply higher U.S. interest rates or
a U.S. dollar collapse — could seriously aggravate the very debt crisis that
the bailout plan seeks to address.
26 Fiscal Year 2009 Mid-Session Review, Budget of the U.S. Government,
http://www.whitehouse.gov/omb/budget/fy2009/pdf/09msr.pdf, page 1.
27 Economists should not seek to make a more precise federal deficit projection at this time, given the many
uncertainties and clouds now hovering over the U.S. economy and financial markets. Among the major
unknowable factors are: The final size and nature of any bailout legislation, unpredictable budget overruns
in any bailout program, the recovery rates of any bad assets purchased, and any further spread or deepening
of the debt crisis caused by a continuing recession, higher interest rates, or a falling dollar.
Weiss Research, Inc. 13
III. Recommendations to Congress
In light of these facts, we have four recommendations:
Recommendation #1. To avoid a sharp rise in interest rates or a collapse in the
U.S. dollar, Congress should limit and reduce the funds allocated to any bailout as
much as possible, focusing primarily on our recommendation #4 below.
Recommendation #2. If Congress is determined to provide substantial sums to a
new government agency to buy up bad private-sector debts, that agency should
pay strictly fair market value for the debts, including a substantial discount that
reflects their poor liquidity. Further, it should be clearly understood that:
􀂃 Due to the recent sharp declines in market values and market liquidity, many of
the bad debts on the books of U.S. financial institutions are currently worth
only a fraction of their face value.
􀂃 When the government buys these debts at fair market value, it will still leave
most of these institutions with severe losses.
􀂃 Many of these institutions do not have the capital to cover their losses and will
fail despite the bailout.
Recommendation #3. Congress should clearly disclose to the public that there are
several significant risks in the financial system that the government is unable to
address with any new legislation, including the possibility of surging defaults on
debts not covered by the bailout plan, a collapse in the derivatives market, and a
chain reaction of corporate failures. It should also disclose that
􀂃 Whether the bailout legislation is adequate or not to stem the debt crisis and
prevent financial panic, the government will need to prioritize the protection of
its own credit and seek to ensure the stability of the U.S. dollar.
􀂃 The private sector, in turn, will need to handle any further spread of the debt
crisis largely without government financial assistance.
Recommendation #4. Rather than provide a safety net for imprudent institutions
and speculators, Congress should devote more effort to bolstering the safety nets
for prudent individuals and savers. These include:
􀂃 The FDIC, which insures bank depositors, but has inadequate funding and
staffing to handle a large wave of bank failures. These should be increased
substantially.
Weiss Research, Inc. 14
􀂃 Securities Investor Protection Corporation (SIPC), which was designed to
cover brokerage firm accounts, but, in practice, would not compensate
investors for losses due to brokerage firm failures in a Wall Street meltdown.
􀂃 State insurance guarantee associations, which promise to cover insurance
policyholders, but which have repeatedly failed to live up to their promise
when large insurers fail.
In conclusion, unless Congress significantly modifies its approach and priorities, it
could produce the worst of both worlds: A failure to resolve the current debt crisis
plus the creation of a new set of crises that merely spread the panic and prolong
the pain.
IV. Recommendations for Savers and Investors
Many investors have unrealistic hopes and expectations regarding what
Washington can accomplish. Even if Congress moves swiftly to enact legislation
allowing the government to buy up bad assets, the government is expected to pay
far less than face value for them. In that case, banks will continue to suffer losses
and fail, uninsured depositors will continue to lose money, and investors will
continue to see their shares lose all, or nearly all, their value.
Therefore, regardless of what Congress decides, savers and investors should
continue to save and invest prudently, seeking the safest havens for their money,
such as banks with a Financial Strength Rating of B+ or better, U.S. Treasury bills,
and money market funds that invest almost exclusively in short-term U.S.
Treasury securities or equivalent.
In order to avoid banks, S&Ls and insurers that may be at risk as well as to find
stronger institutions, Weiss Research recommends that consumers take advantage
of the free financial strength ratings offered by www.TheStreet.com, under
Portfolio Tools. In addition, as a public service, Weiss Research provides an
informational 1-hour video on how to cope with the debt crisis, entitled “The X
List,” at www.moneyandmarkets.com.
Weiss Research, Inc. 15
Appendix A. Large U.S. Banks and Thrifts at Risk
Large U.S. banks and S&Ls at risk of failure may constitute the most immediate
threat to the global financial system. Among institutions with $25 billion or more
in assets, our analysis indicates that the institutions below are currently the most
vulnerable.
Table 1. Largest Banks and Thrifts Believed to Be at Risk of Failure
Bank or Thrift
TheStreet.com
Financial Strength
Rating
Credit
Exposure to
Derivatives
(% of riskbased
capital)
Total
Assets
($ billions)
Citibank NA C- 279% 1,292.5
Wachovia Bk NA C+ 78% 665.8
Washington Mutual Bank D+ 317.8
HSBC Bk USA NA D+ 721% 188.3
SunTrust Bk C- 174.7
National City Bk D 152.5
Sovereign Bk D+ 81.9
Huntington NB D+ 55.6
E*Trade Bank D+ 48.2
First Tennessee Bk NA D+ 37.1
Data: Federal Deposit Insurance Corporation (FDIC), Call Reports, March 31, 2008, and
Office of Thrift Supervision (OTS), Thrift Financial Reports, March 31, 2008.
Analysis: Weiss Research, Inc.
The analysis is based on:
1. TheStreet.com Financial Strength Rating of D+ or lower, reflecting low scores
in capital adequacy, asset quality, liquidity or other factors. In the table above,
three banks with a rating of C- or higher are included due to other weaknesses not
reflected in TheStreet.com Financial Strength Rating, as specified below.
2. Credit exposure to derivatives, as reported in the OCC’s Quarterly Report on
Bank Trading and Derivatives Activities, First Quarter 2008, shown above as a
percentage of risk-based capital.
3. Exposure to mortgages and mortgage-backed securities.
Weiss Research, Inc. 16
Appendix B. Large Banks and Thrifts with the Most Residential Mortgages
and Heavy Exposure to Nonperforming Residential Mortgages
Beyond current concerns regarding mortgage-backed securities held by investors,
there are two urgent questions for Congress that relate to the underlying mortgages
themselves: (1) Which large banks and thrifts have the most residential mortgages
in America? and (2) Which large banks and thrifts have the greatest exposure to
nonperforming mortgages? The answers are provided in the tables below.
Table 2. Large Banks with the Most Residential Mortgages
(FDIC member banks with $10 billion or more in assets)
Bank City State
1-4 Family
Residential
Loans
($ thousands)
Bank of America NA Charlotte NC 311,957,932
Citibank NA Las Vegas NV 197,775,000
Wachovia Bk NA Charlotte NC 170,593,000
JPMorgan Chase Bk NA Columbus OH 156,937,000
Wells Fargo Bk NA Sioux Falls SD 123,021,000
SunTrust Bk Atlanta GA 54,138,579
National City Bk Cleveland OH 47,669,280
RBS Citizens, NA Providence RI 44,427,070
US Bk NA Cincinnati OH 41,681,614
HSBC Bk USA NA Wilmington DE 34,716,831
Bank of America RI Providence RI 33,447,908
Branch Bkg&TC Winston-Salem NC 32,143,712
Regions Bank Birmingham AL 30,310,331
Wells Fargo Bk South Central Faribault MN 26,833,000
PNC Bk NA Pittsburgh PA 22,846,064
GMAC Bank Midvale UT 17,557,666
Bank of America CA NA San Francisco CA 17,372,179
Union Bk of CA NA San Francisco CA 16,773,374
Huntington NB Columbus OH 13,906,057
Capital One, NA McLean VA 13,083,201
Fifth Third Bk Cincinnati OH 13,000,578
Keybank NA Cleveland OH 12,910,665
Bank of the West San Francisco CA 12,513,574
First Tennessee Bk NA Memphis TN 11,932,922
Manufacturers & Traders TC Buffalo NY 11,213,708
Harris NA Chicago IL 10,686,930
LaSalle Bank Midwest NA Troy MI 10,551,417
M&I Marshall & Ilsley Bk Milwaukee WI 10,098,683
Bank of America OR NA Portland OR 10,070,446
Data: Federal Deposit Insurance Corporation (FDIC), Call Reports, March 31, 2008
Analysis: Weiss Research, Inc., TheStreet.com
Weiss Research, Inc. 17
Table 3. Large Thrifts with the Most Residential Mortgages
(OTS member thrifts with $10 billion or more in assets)
Thrift City State
1-4 Family
Residential
Loans
($ thousands)
Washington Mutual Bank Henderson NV 191,621,666
Countrywide Bank, FSB Alexandria VA 91,381,293
Wachovia Mortgage, FSB N Las Vegas NV 57,822,468
ING Bank FSB Wilmington DE 27,678,391
E*Trade Bank Arlington VA 26,298,247
Hudson City Savings Bk Paramus NJ 24,822,785
Sovereign Bk Wyomissing PA 19,571,461
IndyMac Bk FSB Pasadena CA 16,545,208
Citicorp Trust Bank, FSB Wilmington DE 14,787,107
Merrill Lynch B&TC, FSB New York NY 14,477,450
USAA FSB San Antonio TX 13,146,234
Amtrust Bank Cleveland OH 11,825,127
Astoria FS&LA New York NY 11,699,995
BankUnited FSB Coral Gables FL 11,356,571
Downey S&LA FA Newport Beach CA 11,011,485
Data: Office of Thrift Supervision (OTS), Thrift Financial Reports, March 31, 2008
Analysis: Weiss Research, Inc., TheStreet.com
Table 4. 61 Large Banks with Heavy Exposure to
Nonperforming Residential Mortgages
(FDIC member banks with $5 billion or more in assets and with an exposure
to nonperforming 1-4 family mortgages of 1.5 times risk-based capital or more )
Bank City State
Nonperforming
1-4s/ Riskbased
Capital
Total Assets
($ thousands)
Franklin Bk SSB Houston TX 31.60 5,922,659
R-G Premier Bk of PR San Juan PR 29.01 7,165,822
Doral Bank Puerto Rico San Juan PR 22.50 8,835,752
Emigrant Bk New York NY 21.10 12,890,324
Oriental B&TC San Juan PR 18.89 5,802,800
Bank of America OR NA Portland OR 15.98 10,697,284
Firstbank of PR San Juan PR 14.02 17,173,199
National City Bk Cleveland OH 13.14 152,519,145
Wells Fargo Bk S. Central Faribault MN 11.36 27,710,000
Banco Santander PR San Juan PR 10.02 9,103,575
Fremont Invest. & Loan Anaheim CA 9.86 6,047,598
LaSalle Bank Midwest NA Troy MI 8.57 37,008,195
Irwin Union Bk Columbus IN 6.62 5,425,343
SunTrust Bk Atlanta GA 6.60 174,716,429
Weiss Research, Inc. 18
GMAC Bank Midvale UT 6.32 30,329,334
Banco Popular de PR San Juan PR 5.98 26,137,000
Banco Popular N. America New York NY 5.08 12,738,302
TCF NB Wayzata MN 5.07 16,395,643
Wachovia Bk NA Charlotte NC 5.05 665,817,000
Arvest Bk Fayetteville AR 4.94 9,957,014
HSBC Bk USA NA Wilmington DE 4.75 188,284,200
Fifth Third Bk Cincinnati OH 4.62 64,564,486
Bank of America CA NA S. Francisco CA 4.41 18,878,893
Citizens Bk Flint MI 4.41 12,538,893
Banco Bilbao Vizcaya Arg. San Juan PR 4.36 6,644,109
First Bk Creve Coeur MO 4.36 10,782,714
Bank of America NA Charlotte NC 3.97 1,355,154,455
Fulton Bk Lancaster PA 3.95 8,337,152
Bank of North Georgia Alpharetta GA 3.54 5,433,034
Fifth Third Bk Grand Rapids MI 3.52 54,142,779
Branch Bkg&TC Winston-Salem NC 3.46 131,915,915
Bank of America RI Providence RI 3.38 35,790,853
Carolina First Bk Greenville SC 3.21 13,693,866
Amcore Bk NA Rockford IL 3.20 5,135,631
RBC Centura Bk Raleigh NC 3.09 25,548,477
Northwest Svgs Bk Warren PA 3.03 6,911,410
Webster Bk NA Waterbury CT 2.98 17,075,904
Ocean Bk Miami FL 2.96 5,120,611
Wells Fargo Financial Bk Sioux Falls SD 2.79 5,858,375
Regions Bank Birmingham AL 2.76 139,765,596
JPMorgan Chase Bk NA Columbus OH 2.68 1,407,568,000
First Tennessee Bk NA Memphis TN 2.61 37,063,967
Manufacturers & Traders Buffalo NY 2.60 65,263,266
Provident Bk Baltimore MD 2.54 6,130,241
RBS Citizens, NA Providence RI 2.52 130,820,181
Susquehanna Bk PA Lititz PA 2.50 6,516,448
United Community Bank Blairsville GA 2.45 8,379,863
M&L Marshall & Ilsley Bk Milwaukee WI 2.36 57,089,224
Pacific Capital Bk NA Sta. Barbara CA 2.15 7,392,474
Whitney NB New Orleans LA 2.02 10,765,499
Citibank NA Las Vegas NV 1.96 1,292,503,000
First Commonwealth Bk Indiana PA 1.93 6,063,860
Harris NA Chicago IL 1.80 41,430,553
Old NB Evansville IN 1.76 7,574,796
Colonial Bk NA Montgomery AL 1.69 27,302,220
Capital One, NA McLean VA 1.62 104,822,854
Associated Bk NA Green Bay WI 1.58 21,625,399
Trustmark NB Jackson MS 1.56 8,950,552
US Bk NA Cincinnati OH 1.53 237,269,315
First Midwest Bk Itasca IL 1.51 8,264,472
Wells Fargo Bk NA Sioux Falls SD 1.50 486,886,000
Data: Federal Deposit Insurance Corporation (FDIC), Call Reports, March 31, 2008
Analysis: Weiss Research, Inc., TheStreet.com
Weiss Research, Inc. 19
Table 5. 25 Large Thrifts with the Heavy Exposure
to Nonperforming Residential Mortgages
(OTS member thrifts with $5 billion or more in assets and with an exposure
to nonperforming 1-4 family mortgages of 1.5 times risk-based capital or more)
Thrift City State
Nonperforming
1-4s/ Riskbased
Capital
Total Assets
($ thousands)
Sovereign Bk Wyomissing PA 105.58 81,906,412
USAA FSB San Antonio TX 59.83 31,898,576
American Express Bk, FSB Salt Lake City UT 50.73 24,560,329
ING Bank FSB Wilmington DE 44.70 78,064,701
Wachovia Mortgage, FSB N Las Vegas NV 36.71 67,911,515
Capitol Federal Svgs Bk Topeka KS 35.11 8,063,364
Raymond James Bk FSB St Petersburg FL 28.15 8,313,839
EverBank Jacksonville FL 27.20 5,922,591
Chevy Chase Bk FSB McLean VA 24.99 15,130,114
Anchorbank FSB Madison WI 19.83 5,088,062
Flagstar Bk FSB Troy MI 17.40 15,898,386
Washington FS&LA Seattle WA 15.84 11,738,021
Washington Mutual Bk FSB Park City UT 10.16 44,305,153
People's United Bank Bridgeport CT 9.35 20,541,299
Countrywide Bank, FSB Alexandria VA 7.38 121,412,048
IndyMac Bk FSB Pasadena CA 7.13 32,010,816
American Svgs Bk FSB Honolulu HI 5.91 6,844,771
Amtrust Bank Cleveland OH 5.84 17,301,384
Guaranty Bk Austin TX 5.31 16,303,016
GE Money Bank Salt Lake City UT 3.72 16,050,311
Merrill Lynch B&TC, FSB New York NY 3.64 31,036,835
State Farm Bk, FSB Bloomington IL 3.51 15,754,418
Morgan Stanley Trust Jersey City NJ 3.26 5,157,291
BankUnited FSB Coral Gables FL 3.08 14,312,695
Downey S&LA FA Newport Beach CA 2.43 13,130,348
Data: Office of Thrift Supervision (OTS), Thrift Financial Reports, March 31, 2008
Analysis: Weiss Research, Inc., TheStreet.com
Weiss Research, Inc. 20
Appendix C. U.S. Banks and Thrifts Believed to Be at Risk of Failure
As stated in Part I, banks and S&Ls at risk have assets of $3.2 trillion, or 41 times
the assets of banks on the FDIC’s watch list. These include the assets of Citibank
NA, Wachovia Bank NA and SunTrust Bank cited in Appendix A above, plus the
assets of the banks and thrifts listed below.
U.S. Banks and Thrifts Believed to Be at Risk of Failure
(All institutions with a Financial Strength Rating of D+ or lower)
Bank or Thrift City State
TheStreet.
com
Rating
Total Assets
($ thousands)
Washington Mutual Bank Henderson NV D+ 317,823,952
HSBC Bk USA NA Wilmington DE D+ 188,284,200
National City Bk Cleveland OH D 152,519,145
Countrywide Bank, FSB Alexandria VA D 121,412,048
Sovereign Bk Wyomissing PA D+ 81,906,412
Huntington NB Columbus OH D+ 55,566,801
E*Trade Bank Arlington VA D+ 48,184,276
First Tennessee Bk NA Memphis TN D+ 37,063,967
LaSalle Bank Midwest NA Troy MI D 37,008,195
IndyMac Bk FSB Pasadena CA E- 32,010,816
Goldman Sachs Bk USA Salt Lake City UT D 25,573,236
Amtrust Bank Cleveland OH D- 17,301,384
Firstbank of PR San Juan PR D+ 17,173,199
Westernbank Puerto Rico Mayaguez PR D- 15,971,230
Flagstar Bk FSB Troy MI D- 15,898,386
Chevy Chase Bk FSB McLean VA D+ 15,130,114
BankUnited FSB Coral Gables FL D+ 14,312,695
Downey S&LA FA Newport Beach CA D- 13,130,348
Banco Popular North America New York NY D+ 12,738,302
Lehman Brothers Bk FSB Wilmington DE D- 12,246,720
Sterling Savings Bank Spokane WA D+ 12,189,506
Banco Santander PR San Juan PR D 9,103,575
Corus Bk NA Chicago IL D 8,976,744
Doral Bank Puerto Rico San Juan PR D 8,835,752
R-G Premier Bk of PR San Juan PR D+ 7,165,822
Barclays Bank Delaware Wilmington DE D 7,125,125
First Federal Bank of CA FSB Santa Monica CA D+ 7,083,638
BankAtlantic Fort Lauderdale FL D 6,212,631
Fremont Investment & Loan Anaheim CA E 6,047,598
Franklin Bk SSB Houston TX D- 5,922,659
Irwin Union Bk Columbus IN D+ 5,425,343
Amcore Bk NA Rockford IL D+ 5,135,631
Ocean Bk Miami FL D- 5,120,611
Anchorbank FSB Madison WI D+ 5,088,062
PFF B&T Pomona CA E+ 4,103,786
Hanmi Bk Los Angeles CA D+ 3,927,609
Imperial Capital Bk La Jolla CA D+ 3,530,257
Weiss Research, Inc. 21
First Community Bk Taos NM D+ 3,455,652
TierOne Bk Lincoln NE D 3,374,893
First Place Bank Warren OH D+ 3,283,975
Independent Bk Ionia MI D- 3,238,995
BLC Bank, NA Strasburg PA D- 3,178,636
Superior Bank Birmingham AL D 2,943,775
Orion Bk Naples FL D 2,936,394
First NB of AZ Scottsdale AZ E+ 2,836,085
Eurobank San Juan PR D- 2,792,787
Home S&LC Youngstown OH D 2,716,625
Amboy Bank Old Bridge NJ D- 2,695,636
West Coast Bk Lake Oswego OR D 2,607,534
Meridian Bank NA Wickenburg AZ D 2,505,730
Bank of the Cascades Bend OR D+ 2,403,853
Seacoast NB Stuart FL D- 2,391,360
Vineyard Bk, NA Rancho Cucamonga CA D 2,326,862
Macatawa Bk Holland MI D 2,133,420
Americanwest Bk Spokane WA D 2,106,351
Citizens First Svg BK Port Huron MI D+ 2,091,041
County Bk Merced CA D 2,078,298
Intervest NB New York NY D+ 2,046,601
Lydian Private Bank Palm Beach FL D+ 2,008,561
New South FSB Irondale AL D 1,986,425
ANB Financial NA Rogers AR F 1,895,545
Hillcrest Bk Overland Park KS D- 1,882,968
Great FL Bk Miami FL D+ 1,850,387
Guaranty Bank Milwaukee WI D- 1,826,503
Wauwatosa Svgs Bk Wauwatosa WI D+ 1,771,794
Fidelity Bk Norcross GA D+ 1,732,780
First NB of Nevada Reno NV D- 1,634,041
Silver St Bk Henderson NV D 1,624,672
Premier Bk Jefferson City MO D- 1,569,820
Ameriprise Bank, FSB New York NY D 1,551,509
Mutual Bk Harvey IL D- 1,532,589
Scotiabank DE PR Hato Rey PR D- 1,529,267
TIB Bank Naples FL D+ 1,423,951
First Bank of Beverly Hills Calabasas CA D+ 1,410,692
Bridgeview Bk Group Bridgeview IL D+ 1,403,902
Temecula Valley Bk Temecula CA D 1,373,343
Security Bank of Bibb County Macon GA D- 1,315,478
Integrity Bk Alpharetta GA E- 1,203,701
Bank of Granite Granite Falls NC D 1,192,025
Merrick Bank Corp S Jordan UT D+ 1,181,376
First Mariner Bk Baltimore MD D- 1,172,860
Affinity Bk Ventura CA D- 1,172,207
Eastern Svgs Bk FSB Hunt Valley MD D 1,132,481
Alliance Bk Culver City CA D- 1,111,157
OmniAmerican Bank Fort Worth TX D 1,086,199
Baylake Bk Sturgeon Bay WI D 1,078,889
Fidelity Bank Dearborn MI D 1,045,530
Weiss Research, Inc. 22
Midcountry Bank Marion IL D- 1,025,760
Omni NB Atlanta GA D- 992,505
Founders Bk Worth IL D 980,356
LibertyBank Eugene OR D 960,085
Avidia Bank Hudson MA D+ 954,640
Inter Svgs Bk FSB Maple Grove MN D- 951,692
Crescent B&TC Jasper GA D+ 950,001
Buckhead Community Bk Atlanta GA D- 943,151
Florida Community Bk Immokalee FL E+ 935,236
Century Bk FSB Sarasota FL D- 929,123
Vision Bk Panama City FL D- 922,174
Heartland Bk Clayton MO D+ 892,367
First NB of GA Carrollton GA D- 882,993
Security Bk of Kansas City Kansas City KS D+ 880,439
Falcon International Bk Laredo TX D+ 871,386
Peoples Community Bank W Chester OH D- 870,486
Florida Choice Bk Mt Dora FL D 868,805
Park View FSB Cleveland OH D 868,702
Lincoln Bank Plainfield IN D+ 862,451
First NB of the South Spartanburg SC D+ 850,717
Millennium BCP Bank, NA Newark NJ D- 841,322
First Federal Bank Harrison AR D 828,860
Florida Capital Bank, NA Jacksonville FL D- 819,512
Home NB Blackwell OK D 815,543
MidWestOne Bk Oskaloosa IA D- 778,014
CapitalSouth Bank Birmingham AL D- 756,441
Bank of Blue Valley Overland Park KS D- 753,205
Mid-Missouri Bk Springfield MO D+ 752,747
Bank of East Asia USA NA New York NY D 748,859
One United Bk Boston MA D 742,866
First St Bk Eastpointe MI D 738,642
Columbian B&TC Topeka KS D- 735,766
Omni Bk Metairie LA D 727,864
First Niagara Commercial Bk Lockport NY D 717,088
Delaware County B&TC Lewis Center OH D 716,851
First Georgia Banking Co Franklin GA D+ 715,523
1st Centennial Bk Redlands CA D- 715,231
First St Bk Stockbridge GA D- 705,237
Teambank NA Paola KS D+ 704,541
Bank of Florida-Southwest Naples FL D+ 698,891
First Gulf Bank, NA Pensacola FL D+ 698,875
Irwin Union Bk FSB Columbus IN D+ 692,224
American Bk of Commerce Wolfforth TX D+ 690,847
Tower B&TC Fort Wayne IN D+ 687,243
Conestoga Bank Chester Springs PA D- 680,814
Haven SB Hoboken NJ D+ 680,150
Independence Bk Owensboro KY D+ 675,449
Sterling B&T FSB Southfield MI D- 670,627
Federal Trust Bank Sanford FL E- 670,589
Lowell Five Cents SB Lowell MA D+ 663,853
Weiss Research, Inc. 23
Beach Community Bk Fort Walton Bch FL D- 660,975
Alliance Bank Lake City MN D 651,634
Citizens-Union Svgs Bk Fall River MA D 649,190
K Bk Owings Mills MD D- 649,097
Redding Bk of Commerce Redding CA D 646,946
Gainesville Bank & Trust Gainesville GA D 646,373
First Central Svgs Bk Glen Cove NY D- 645,056
Ponce De Leon Federal Bk New York NY D+ 643,478
Bank of Choice Colorado Arvada CO D- 637,106
Vanguard B&TC Valparaiso FL D+ 633,756
Northwest Georgia Bk Ringgold GA D+ 633,733
BPD Bk New York NY D+ 632,610
Sovereign Bk NA Dallas TX D 632,482
Marine Bk-Springfield Springfield IL D 631,946
Community West Bk Goleta CA D+ 628,610
Community Bk Loganville GA E+ 623,764
Baltimore County Svgs Bk FSB Baltimore MD D 615,915
Republic Federal Bank, NA Miami FL D- 613,165
American Bk St Paul MN D 612,162
Peninsula Bk Englewood FL D- 606,312
Vantus Bk Sioux City IA D+ 597,030
Baraboo NB Baraboo WI D+ 596,978
Warren Bk Warren MI D- 587,082
Helm Bk Miami FL D+ 586,280
American River Bk Sacramento CA D 585,958
Security Pacific Bk Los Angeles CA D- 585,184
Northeast Bk Auburn ME D+ 583,816
1st United Bk Boca Raton FL D+ 575,509
Transatlantic Bk Miami FL D+ 573,742
First Bk Fncl Centre Oconomowoc WI D+ 571,327
Central Co-Op Bk Somerville MA D+ 570,835
Community South Bk Parsons TN D- 569,721
American Founders Bk Inc Frankfort KY D- 561,375
Bank of Choice Evans CO D- 560,922
Crescent B&TC New Orleans LA D+ 559,526
Northside Cmnty Bk Gurnee IL D 554,194
Alliance Bk Corp Fairfax VA D 553,450
Premier Bk-Maplewood Maplewood MN D- 552,769
Bradford Bank Baltimore MD D- 551,944
Signature Bk of Arkansas Fayetteville AR D 549,211
Equitable Bk SSB Wauwatosa WI D+ 548,555
Peachtree Bk Duluth GA E 545,076
Community Central BK Mt Clemens MI D- 544,704
FirsTier Bk Louisville CO D+ 542,909
First American Intl Bk Brooklyn NY D+ 542,634
Riverside Bk of Gulf Coast Cape Coral FL D- 535,046
Farmers & Merchants Bk Lakeland GA D- 534,414
Presidential Bk FSB Bethesda MD D+ 534,166
Geauga Svg Bk Newbury OH D+ 530,388
Builders Bk Chicago IL D- 527,387
Weiss Research, Inc. 24
Graystone Bank Lancaster PA D 524,412
Habersham Bk Clarkesville GA D- 520,216
Community First Bk Harrison AR D+ 519,235
Illinois NB Springfield IL D- 517,987
Southport Bk Kenosha WI D+ 510,740
Central Progressive Bk Lacombe LA D- 508,652
Highland Bk St Michael MN D+ 507,223
Magyar Bank New Brunswick NJ D 504,200
Truman Bk St Louis MO D 502,798
Westsound Bk Bremerton WA D- 502,789
Desert Hills Bk Phoenix AZ D+ 502,374
Data: Federal Deposit Insurance Corporation (FDIC), Call Reports, March 31, 2008, and
Office of Thrift Supervision (OTS), Thrift Financial Reports, March 31, 2008. Includes institutions that may
have merged or failed since March 31, 2008.