Jackson Jambalaya

Regions Bank apparently has its hand out for some federal bailout money after announcing this week its earnings plunged 79% in the third quarter. The Birmingham Business Journal reported:
"The Birmingham bank posted net income of $79 million for the quarter ended Sept. 30, versus $394 million during the same period last year. In the second quarter, Regions reported $206 million in earnings.....
Regions, Alabama’s largest financial institution, announced plans to participate in the government’s capital purchase program, which is part of the $700 billion rescue package signed into law earlier this month. The Treasury Department will spend $125 billion to help provide capital to thousands of banks in exchange for preferred stock.
If Regions qualifies, it will gain between $1.2 billion and $3.5 billion worth of capital, which would provide “a significant strengthening of our overall capital base,” according to the press release.
The bank’s Tier 1 capital ratio – the primary measure of a financial institution’s capital level – was at about 7.47 percent in the third quarter or $1.7 billion above the minimum allowed by bank regulators......." http://www.bizjournals.com/birmingham/stories/2008/10/20/daily10.html?ana=from_rss

BBJ also reported Regions suffered from large losses due to "non-performing" loans:
"In the latest quarter, Regions sold off or moved about $430 million of non-performing loans and foreclosed properties off its balence sheet, which totaled $186 million in losses.
Total net loan charge-offs jumped to $416 million, compared to $209 million in the second quarter..."

On a more critical note, it should be pointed out The Clarion-Ledger did not publish this information this week even though Regions (which contains the former Deposit Guaranty National Bank) is one of the largest banks in Mississippi. The newspaper's business section continues to display its sloppy nature as its entire coverage on Regions' problems consisted of this single paragraph:
"Regions had a poorer performanse and reduced its dividend from 38 cents to .10 cents per share to strengthen its capital position. Regions posted a net income of $206.4 milion in the second quarter, with 30 cents per diluted share, including the final $100.1 million in expenses from the institution's merger with AmSouth."

No mention of a request for federal help, the size of the losses, or what the net income in the third quarter was, which was the point of the whole story. Even worse, the story was written by a Hattiesburg American reporter. So much for business journalism in Jackson as The Clarion-Ledger, Mississippi Business Journal, and other local publications completely missed a story that was definitely newsworthy as well as easily available on the web as no fewer than three different business publications reported it early this week.

Regions Earnings Statement:
http://www.regions.com/about_regions/IR_newsreleases.html

Can't say he didn't warn us.

Just wait until you see what will come next.
"If you're playing "Buffett", following his claim (note: there is no penalty for lying on national television about what you're doing in your personal account) that he's buying here, there is a little ugly fact you need to be aware of.
That fact is treasury issuance.
See, to fund all this crap that Congress, Paulson and Bernanke have in the pipe (you know, the TARP, the newly-minted SIV that Ben announced this morning to buy commercial paper, etc) the treasury issue requirements will be north of three trillion dollars in this fiscal year.
Oh, and that's before Obama wins (and he will) and promises another $1 trillion worth of new spending without a nickel's worth of ability to fund it.......
what's nasty here is that right now we're seeing a flight INTO longer-term bonds (the 10 in particular), which means the market is anticipating another stock panic, and with good reason....
Bernanke is doing what Paulson tried and failed at in the "free" (coerced by arm-twisting by Paulson) market through executive fiat, and he is printing money to fund it. Exactly how much money he is printing (as opposed to lending) depends on the precise amount of overpayment that is being induced through these so-called "loans", but that it is happening is not open to question.
Why has this become necessary?
Ben and Hank produced a dislocation in this section of the marketplace by favoring other debt instruments with federal guarantees, thereby forcing money out of these instruments.
This in turn created major problems for money market funds who buy this paper as a routine matter of course in that when they needed to redeem deposits they suddenly found no buyers for the securities, as those people had fled to other instruments that Ben had guaranteed payment on!
As each new facility is rolled out by Ben and Hank a new area of debt becomes backstopped by the government in some fashion, thereby forcing money out of other instruments and causing those instruments to become distressed!
We are rapidly reaching the point where only The Fed and Treasury are providing any lending at all!........"
The Market Ticker: Fiscal Category 5 Warning