As Two More National Banks Fail, Crisis Picks Up Speed

The Office of the Comptroller of the Currency revoked the charters of two national banks and the FDIC moved in to protect their depositors. First National Bank of Nevada and First Heritage Bank of Newport Beach failed.

According to The Wall Street Journal, The FDIC was appointed receiver of both banks. The Nevada bank has over $3 billion in deposits.

Most analysts believe that the current banking crisis will only lead to about 100 bank failures, many fewer than occurred in the S&L disaster of the late 1980s.

The trouble with the theory of the low failure rate is that housing prices are dropping more rapidly than most observers thought they would, and foreclosures are rising more quickly.

Bill Gross, the most prominent bond investor in the US and head of money management firm Pimco, said that the total financial company write-offs from the present housing problems will total $1 trillion. So far, less than half of that has worked its way through the system.

There is not enough new capital in the market to support another $500 billion or more of bank write-downs.

A lot more than 100 banks will fail in the next two years.

Douglas A. McIntyre