THE BASIS POINT

58 failed banks In 2011. More bank earnings.

When somebody begins a sentence with “It would be nice if…” the right thing to do is to wait politely for the speaker to finish. No project ever gets around to the “it-would-be-nice” features: or if they do, they regret it. Wait for sentences that begin, “We have to…”, and pay close attention, and see if you agree. As in, “We have to have our government exercise some fiscal restraint…” Go ahead and accuse me of not seeing the big picture here. If I earn $3,000 per month and the limit on my credit card is $5,000, and I spend $6,000 every month, is it better for me to decrease my spending and/or increase my income? Or after debating with the wife for several weeks, call the credit card company and ask for a higher limit?

The tally of 2011 failed banks is at 58 after the FDIC closed three banks Friday: in Florida American Momentum Bank took over Southshore Community Bank and LandMark Bank of Florida. And up in Colorado, Bank of Choice was closed by the Colorado Division of Banking, which appointed the FDIC as receiver, which brought in Bank Midwest, National Association, Kansas City, Missouri. By the way, if one wants to see the data on the latest number of professional liability lawsuits authorized by the FDIC Board of Directors and the total monetary value of these claims, one should visit LiabilityLawsuits .

We’re nearly done with 2Q earnings. The latest round involved BB&T (profit was up 46%, driven by better credit quality and loan growth), Fifth Third (profit up 76% driven by improving credit conditions and lower loan-loss provisions), US Bancorp (commercial and home loans saw roughly 3% growth vs. the prior quarter offsetting runoff of construction and credit card loans), PNC (lower borrowing costs and higher lending to manufacturing, financial services, and health care were offset by distressed real estate loans and lower consumer lending), and M&T (average loans grew at an annualized rate of 2% and it benefitted from the acquisition of Wilmington Trust). Overall, aside from Bank of America, most lenders did well profit-wise during the second quarter.