In another case of the Feds proping up zombie banks, sources have reported that an SEC memo has stated that the FDIC will seize Guaranty Bank and it will not be sold as previously rumored.
This continues the trend of bank seizures occurring with virtually no warning. According to one prominent hedge fund manager:
“The problem is that the regulators know that if they call these things anything worse than “well capitalized”…it is a kiss of death. In many ways it is the same issue as rating agencies (curse of the AAA) that know that if they downgrade certain types of companies, they are putting them out of business. As a result, many banks are “well capitalized” until the day they are seized. It is absurd.” {. . .}
The seizure by the FDIC will hit the regulator’s budget to the tune of at least $5.3 bil according to sources within the OTS. This, on top of what’s going on with Colonial bank failing, should wipe out what’s left of the FDIC’s budget. As a result, they are going to have to borrow from Treasury and then add that cost to our nations banks, which we all know just gets passed on to the taxpayer in the form of higher banking fees.
http://www.zerohedge.com/article/guest-post-sec-memo-says-guaranty-bank-be-seized-not-sold