The nine banks involved in today’s transaction are: Bank USA, National Association, Phoenix, Arizona; California National Bank, Los Angeles, California; San Diego National Bank, San Diego, California; Pacific National Bank, San Francisco, California; Park National Bank, Chicago, Illinois; Community Bank of Lemont, Lemont, Illinois; North Houston Bank, Houston, Texas; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas. As of September 30, 2009, the banks had combined assets of $19.4 billion and deposits of $15.4 billion.

The nine banks had 153 offices, which will reopen as branches of U.S. Bank beginning tomorrow during their normal business hours. Depositors of the nine banks will automatically become depositors of U.S. Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until U.S. Bank can fully integrate the deposit records of the nine failed banks.

Over the weekend, depositors of the nine banks can access their money by writing checks or using ATM or debit cards. Checks drawn on the banks will continue to be processed. Loan

customers should continue to make their payments as usual.

The FDIC and U.S. Bank entered into a loss-share transaction on approximately $14.4 billion of the combined purchased assets of $18.2 billion. U.S. Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. For more information on loss share, please visit:http://www.fdic.gov/bank/individual/failed/lossshare/index.html.

Customers who have questions about today’s transaction can visit the FDIC web page for Park National Bank.

The NCUA announced yesterday that it has closed Comunidades Federal Credit Union of Los Angeles and authorized that the majority of accounts be taken over by Water and Power Community Credit Union.

Comunidades is the sixth federally insured credit union liquidation this year. The NCUA said that the credit union’s declining financial condition led to the closure. The credit union had $658,122 in assets and served 1,141 members.

Water and Power has $482.9 million in assets and 52,340 members with six branch locations. The take over of Comunidades’ accounts ensures that the majority of members will have uninterrupted credit union service, the NCUA said.

For more information, do not hesitate to contact the NUCA webpage for Comunidades Federal Credit Union.

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In case you missed it, the financial system in the US is near collapse. This weekend was unbelievable. Lehman Brothers filed for bankruptcy. The world’s largest insurer AIG is looking for the Fed to help it avoid collapse and Merrill Lynch was forced to close a deal with Bank of America to save it’s own hide.

Just another day at the office? Hardly. Dow Futures are down 350 points and the FTSE in London is already off nearly 5%. So get ready, this is going to be a very, very difficult day in the markets. Here’s the news of importance:

It all started on Monday last week. In the aftermath of the Fannie and Freddie bailout, market nerves were not calmed. Washington Mutual fired its CEO and announced it had an ominous agreement with the OTS (Office of Thrift Supervision).

Meanwhile Lehman Brothers released an early third quarter earnings report that was widely panned by analysts.

Then, it became obvious that some major losses in the Credit Default Swaps (CDS) market were in the offing due to the takeover of the GSE’s by the government. That was going to hit companies like AIG, which had a huge exposure to the CDS market.

The result was a meltdown in shares of WaMu, Lehman and AIG on Friday.

The Fed called an emergency meeting to deal with Lehman. No agreement was found and Lehman declared bankruptcy early this morning. They have assets of $500 billion

AIG dealt with three buyout shops to shore up its capital base but rejected an offer and went hat in hand to the Fed instead. They have assets of $1 trillion.

WaMu has not seemed to do anything. But rumors are swirling and they will come under great pressure this morning. Oh, and they have assets of $300 billion.

Merrill Lynch was the coup of the day. They struck a deal with Bank of America at a significant premium to both book value and the prevailing market price of their shares. Given what we are likely to see today, Merrill Lynch and its shareholders have to be very very happy. They can say, “thank you very much, John Thain.” Oh, and they have a assets of $1 trillion.

So, we’re talking about combined assets of $2.8 trillion here.

Conclusion
So, the day begins with one company gone (Lehman). Two companies under heavy selling pressure (AIG and WaMu) and one company loving life (Merrill Lynch). Who else should we watch?

All the regional financials, the home builders, and the Commercial Real Estate REITs are all going to be under heavy selling pressure.

Brace yourself!

The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced as early as this weekend, came together hurriedly after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

That it came hurriedly together is true, but there’s little doubt that Paulson could be surprised by the audit results. It stretches fantasy to believe that he was unaware of these difficulties when he asked for the bailout power. Why else would he have asked for it? So, they gave him the power and now the shareholders have been defrauded and the taxpayer is stuck to pay the bill.

In an historic move that virtually wipes out the stockholders of Fannie Mae, the government has taken over the reins and purse strings of both mortgage giants. The American taxpayer is now on the hook for losses yet to be seen, in what many media outlets are calling “the chickens have come home to roost.”

The reaction on the street is that Freddie is finally beginning to be treated like the trash that he is. S&P has finally come out and cut his rating to junk. Witness:

Standard & Poor’s on Sunday cut the ratings on Fannie Mae and Freddie Mac preferred stock to junk status after dividends were eliminated in a takeover bu the U.S. government.

Regardless of the ensuing fallout, the public can be sure of two things. One is that the bailout has nothing to do with helping people keep their homes, and

The only question is how badly this will blow up. Government bailouts are never confidence inspiring regardless of whatever short term reaction we may see on Monday.

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The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced as early as this weekend, came together hurriedly after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

That it came hurriedly together is true, but there’s little doubt that Paulson could be surprised by the audit results. It stretches fantasy to believe that he was unaware of the difficulties when he asked for the bailout power. That’s why he asked for it to begin with. So, they gave him the power and now the shareholders have been defrauded, and the taxpayers are stuck to pay the bill.

In an historic move that virtually wipes out the stockholders of Fannie Mae, the government has taken over the reins and purse strings of both mortgage giants. The American taxpayer is now on the hook for losses yet to be seen, in what many media outlets are calling “the chickens have come home to roost.”

The reaction on the street is that Fanny is finally beginning to be treated like the trash that she is. S&P has finally come out and cut her to junk. Witness:

Standard & Poor’s on Sunday cut the ratings on Fannie Mae and Freddie Mac preferred stock to junk status after dividends were eliminated in a takeover bu the U.S. government.

Regardless of the ensuing fallout, the public can be sure of two things. Firstly, the bailout has nothing to do with helping people keep their homes, and secondly:

The only question is how badly this will blow up. Government bailouts are never confidence inspiring regardless of whatever short term reaction we may see on Monday.

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In what federal regulators are calling the second-largest U.S. bank failure in history, mortgage lender IndyMac Bancorp, Inc.’s IndyMac Bancorp Inc. operations have been taken over by the Federal Deposit Insurance Corp. (FDIC), the regulator that oversees the retail bank. The Office of Thrift Supervision (OTS) said it shut down IndyMac on Friday and that a successor institution, IndyMac Federal Bank, will be opened on Monday.

Say you have warehouse full of toxic Alt-A bio hazard stored on your balance sheet you need to dispose of so no one notices (mono-liners). If the Alt-A waste is temporarily worth 96c on the dollar you have yourself a 4c write down you are happy to take, but not to advertise. So you call in the bio-hazard removal team at Pimco and they back their trucks up to the loading dock of your balance sheet and whisk away the waste under the cover of night. That is, they bought it all from you, but for 70c on the dollar. That’s a 30c loss or write down-unreported and that is what UBS might be trying to get away with:

Specifically, $20bn of Alt-A mortgage securities to be sold to bond giant PIMCO.

Such is the talk going around London dealing rooms anyway.

The Alt-A MBS have reportedly been sold at 70c on the dollar, which would be a massive loss, since UBS valued what looks to be the same instruments at 96c on the $1 just three weeks ago in their 2007 results:

Is there any truth to the rumor? Well

The first glimpse at how UBS fared in the first quarter suggests that something did indeed happen within its Alt-A book. Subprime-related positions were reduced from $27.6bn to $15bn, a cut of about 55 per cent which could easily have come through straight writedowns. But Alt-A fell from $26.6bn to just $16bn, a 40 per cent drop. As the statement says:

These developments are the result of asset disposals as well as the effects of further writedowns.

With $19bn in total writedowns, it’s fair to say the bulk of the reduction came from the latter rather than the former. Assuming that the subprime writedown totalled close to the full $12.6bn, that leaves another $6.4bn to play with. How much of that could conceivably have hit Alt-A? We haven’t seen more than token efforts to write down banks’ Alt-A portfolios thus far.

and this

UBS in its fourth quarter statement (pages 19 to 21 for the gruesome details) has revealed a hitherto unknown $26.6bn in exposure to Alt-A mortgages, and taken a $2bn hit on them. Alt-A didn’t feature in their third quarter report whatsoever.Within that the bulk of UBS’s exposure looks relatively resilient – $0.8bn in losses on the higher rated, first lien exposure, now $21.2bn. The riskier stuff, totalling $5.4bn at the end of the year, took losses of $1.2bn. Given the wholesale meltdown in US housing though, this may cause investors further discomfort.

And here is some fuel for discomfort: what is Pimco going to do with all that hazardous waste? SELL IT! To anyone, before it is discovered what all those slimy things really are. The Ponzi scam keeps going ’round and ’round.

According to its news release, Comerica Incorporated (CMA)’s net income for fiscal 2007 fell to $682 million from $782 million in 2006. Provisions for bad debt surged to $212 million from $37 million in 2006. For the fourth quarter the bank saw a 60% drop in net income.

The bank’s total non performing assets — or bad loans — was $423 million, nearly double the $232 million for fourth quarter 2006, while net loan charge-offs rose to $63 million from $22 million in the same period 2006.

The full year 2007 report is not available- at least not on the bank’s web page – so the only numbers we can post right now are the $63M likely to be written down from net loan charge-offs.