This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Regulators Close Downey, Other Banks

These loans factored heavily in the failure of Washington Mutual and nearly caused Wachovia to fail, before it was sold to Wells Fargo (which trumped a bid from Citigroup (C - Get Report) that now seems like ancient history).

JPMorgan Chase (JPM - Get Report) recently announced plans to modify mortgage terms for up to 400,000 borrowers, many of whom had option-ARMs the bank inherited when it purchased Washington Mutual's loans and deposits from the FDIC. Bank of America (BAC) has a similar loan modification program for loans it acquired when it purchased Countrywide.

Downey had total assets of $12.8 billion and $9.7 billion in deposits. The FDIC estimated the loss to its deposit insurance fund from Downey's failure would be $1.4 billion.

The institution had been assigned a D- (Weak) financial strength rating by Ratings back in March. The most recent ratings were based on June 30 financial reports, and Downey's relatively high capital ratios kept the rating from falling further.

As we discussed last week , Downey's leverage ratio of 7.48% and risk-based capital ratio of 14.50% were well above the normal regulatory requirements of 5% and 10%, respectively, for a bank or thrift to be considered well-capitalized. The ratios also exceeded the respective minimum capital ratios of 7% and 14% required by an OTS consent order the institution entered into Sept. 5.

PFF Bank & Trust

U.S. Bank, NA also took over the banking operations and all deposits of PFF Bank & Trust, which was shuttered by the OTS.

U.S. Bank, NA acquired a total of 213 branches from Downey and PFF, with all branches set to reopen according to their normal hours of operation.

3 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
C $53.07 0.00%
DSL $20.29 0.00%
JPM $62.84 0.00%
USB $42.44 0.00%
WB $14.78 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs