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Is America facing a major banking crisis?

*The Wall Street Journal, by Damian Paletta & David Enrich, August 26, 2008

Regulators Step Up Bank Actions ‘Memorandums of Understanding’ Surge As U.S. Races to Head Off More Failures

“Federal regulators have increased the number of struggling banks they have effectively put on probation, forcing them to fix their problems and try to avoid potentially costly failures.

The Federal Reserve and the Office of the Comptroller of the Currency, two of the nation’s primary bank regulators, have issued more of these so-called memorandums of understanding so far this year than they did for all of 2007, according to data obtained from regulatory agencies under Freedom of Information Act requests.

These secret agreements can force banks to take steps including raising capital, cutting back on risky loans and suspending dividend payments.

The depth of problems in the banking sector will become clearer Tuesday, when the Federal Deposit Insurance Corp. updates its list of ‘problem’ institutions. The FDIC had 90 banks on its list March 31. There have been five bank failures since July 11, and many other banks are considered at risk by regulators.

Government officials have been brokering the memorandums with institutions large and small, from National City Corp., a Cleveland bank with $154 billion in assets, to $660 million-asset First Private Bank & Trust of Encino, Calif., a unit of Boston Private Financial Holdings Inc.

Banks are struggling with their worst crisis in a generation amid the deterioration of real-estate and credit markets nationwide.”

*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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