National News

Fed, Treasury veterans tapped for Obama administration.President-elect Obama named president of the New York Federal Reserve Bank Timothy Geithner to replace Treasury Secretary Henry Paulson in the incoming administration. Obama also named former Treasury Secretary Lawrence Summers director of the National Economic Council. Christina Roemer was named chair for the Council of Economic Advisers, and Obama picked former Fed Chairman Paul Volcker to lead the new President's Economic Recovery Advisory Board. .FDIC third-quarter report: earnings off considerably.The banking industry earned $1.7 billion in the third quarter, a 94 percent drop compared with the third quarter of 2007. FDIC cited higher loan-loss provisions as the main reason for the decline. Loss provisions totaled $50.5 billion, compared with $16.8 billion in the third quarter of last year. Large losses at a few institutions accounted for much of the earnings drop, but more than half of all insured institutions (58.4 percent) reported lower net income in the third quarter, and almost one out of four (24.1 percent) reported a net loss. Nine FDIC-insured institutions failed during the quarter, and the FDIC's problem bank list grew to 171 institutions from 117. .Plan permits bidders without charters to buy deposits/assets.The FDIC unveiled a "modified bidder qualification process" that would expand the pool of potential buyers for failed banks. The process makes it possible for would-be buyers who do not have bank charters to bid for the deposits and assets of failed financial institutions. The FDIC will consider abbreviated information submissions and applications, and may issue conditional approval for deposit insurance, in order to qualify interested parties for its bidders' list. Non-bank buyers must have conditional approval for a charter from a chartering agency and must meet bid criteria established by the FDIC. Bidders must have a business plan that complies with the Community Reinvestment Act, readily available capital and an identified management team that is subject to review by the FDIC. .Regulators close two banks in California, one in Georgia.The OTS and FDIC sold the banking operations at Downey Savings and Loan Association, F.A., Newport Beach, Calif., and PFF Bank and Trust, Pomona, Calif., to Minneapolis-based U.S. Bank on Nov. 21. The Community Bank of Loganville, Ga., was closed the same day by the Georgia Department of Banking and Finance, and acquired by Bank of Essex, Tappahannock, Va. As of Sept. 30, Downey Savings had assets of $12.8 billion and deposits of $9.7 billion. PFF Bank had assets of $3.7 billion and deposits of $2.4 billion. The combined 213 branches of the two organizations reopened as branches of U.S. Bank. The Community Bank of Loganville had assets of $681.0 million and deposits of $611.4 million as of Oct. 17. Its four locations reopened as Bank of Essex branches. The FDIC estimates that the cost to its Deposit Insurance Fund will be $1.4 billion for Downey Savings, $700 million for PFF Bank and between $200 million and $240 million for The Community Bank.