FDIC Bank Closings – We’ve Been Down This Road Before

A recent Wall Street Journal article said that the FDIC was reporting that 97 banks are on their watch list, which means they are teetering close to the breaking point when the FDIC must close them down because they are operating outside of the allowable ratios of liquidity and loss reserves.

We have seen this before, both in Texas and then in New England, when approx 300 banks were taken over and the results were horrendous for borrowers. Those in default were foreclosed on and liquidated. Those not in default were, however, in various forms of technical default, mostly because real estate collateral is worth less than the notes leaving the banks exposed. So, their notes were called also and the collateral liquidated. There were few survivors and lots of businesses were closed as a direct result, even if they were paying current and making a profit.

It’s about to happen again. Beware. Do your debt workout now before you get swept up in the ensuing tsunami, the perfect storm of bank closings and reduced asset value and revenue. In other words, disaster.

There are few options. However, we were here in the late ’80s and know this drill very well as we led the charge to save many small businesses from this very same disaster scenario. We know how to navigate this seemingly unavoidable trap successfully, protecting business assets from liquidation and reducing the personal guaranties to affordable losses. What are you waiting for? Get it done now!