Monday Morning Cup of Coffee

A look at the stories on HousingWire’s weekend desk over the holiday… with more coverage to come on bigger issues. Regulators shut down seven financial institutions — six Illinois-based and one Texas-based. The combined failures are estimated to cost the Federal Deposit Insurance Corp.’s insurance fund $314.3m. In the largest of the transactions, Founders Bank failed, putting its $962.5m of assets and $848.9m of deposits on the line for sale or dispossession. The PrivateBank and Trust Co. paid a 1.5% premium to acquire all the deposits and also purchased $888.4m of its assets. The bank’s failure is estimated to cost the FDIC’s insurance fund $188.5m. The Millennium State Bank of Texas should cost the fund an estimated $47m, while the failure of the Rock River Bank will cost the fund an estimated $27.6m. The First National Bank of Danville will cost the fund $24m. The Elizabeth State Bank will cost the fund an estimated $11.2m. The John Warner Bank will cost the fund $10m, while the First State Bank of Winchester rounds off the week’s failures at an estimated to cost the fund of $6m. It looks as though California regulators were the ones to fail the banks this time. On the heels of the state legislature’s failure to pass a budget, financial institutions and banks began accepting IOUs made payable to their customers. Several banks have said they will accept state-registered warrants through July 10th. “These are unprecedented times that require extraordinary support for our customers,” said Joseph Otting, vice chairman of commercial banking at U.S. Bancorp, one of the firms to issue formal statements on the matter. “As a result of these circumstances,” Otting added, “we will accept these registered warrants for a limited time with the expectation that the state’s budget issues are resolved in the near future.” Effective July 4th, Wachovia Bank International changed its name to Wells Fargo Bank International as part of the integration associated with the Dec. 31, 2008 acquisition by Wells Fargo. “By adopting the Wells Fargo name and brand, we’re now fully part of one of the world’s most respected financial companies,” said Neil Ryan, CEO for Wells Fargo Bank International. “We’re proud to be a part of Wells Fargo’s continued commitment to building lasting banking relationships with companies worldwide. We look forward to satisfying all of our clients’ financial needs across Europe and helping them succeed financially.” The Federal Reserve Bank of New York released details on $36.15bn of agency mortgage-backed securities purchases made through July 1st. The Fed’s purchases favored MBS with 30-year maturations and 4.5% coupons. Of the Fed’s $10.65bn in purchases of this product, $500m settles in September, $5.3bn settles in August and the remaining $4.85bn settles in July. Also bought $13.75bn of 30-year MBS 5.5s; $500m settles in August and the rest settles in July. The Fed also sold $500m of 30-year 5s, a transaction that settled in June, as well as $12.55bn of 30-year 5.5s to settle in August. Struggling homeowners and other financially challenged consumers have a new legal firm on their side. Prodigy Law Group formed recently to provide foreclosure defense services, abusive debt collection resolution, bankruptcy counseling and related resources to consumers burdened by a contracting economy. Managing director Seth Heyman had this to say in a statement:

“Our goal is to provide legal representation to consumers who face foreclosure and other significant financial challenges. Millions of decent, hardworking people have found themselves in dire straits, often for reasons beyond their control. Some are victims of predatory lending practices that robbed them of the equity in their homes. Others find themselves harassed by abusive debt collectors. They placed their trust in large financial institutions and an imperfect regulatory system. These are the people we’re trying to help.”

Write to Diana Golobay.

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