For all the reassurances we have received over the past few weeks perhaps we need to take a closer look at where we keep our money, or at least how we keep our money.

Yesterday, Friday, the Office of the Comptroller closed the First National Bank of Nevada and the First Heritage Bank NA of California.  I wonder if someone in Washington is marking the names off the watch list as one by one the banks are closed or taken over by the FDIC.

The FDIC said the cost of the transactions to its insurance fund is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.

The FDIC said the 28 offices of the two banks will reopen on Monday as Mutual of Omaha Bank. Over the weekend, customers can access their money by writing checks, using automatic teller machines or debit cards.

Mutual of Omaha Bank currently has more than $750 million in assets and operates 14 retail branches in Nebraska and Colorado with commercial lending offices in Dallas and Des Moines, Iowa, the FDIC said.

We have been warned of more banking failures probably throughout the remainder of this year and next year.  Of course, according to regulators none of the banks on the watchlist are expected to be the size of IndyMac, the countries third largest bank failure.  However, lest we become too comfortable with that analysis, IndyMac was not on the watchlist.  It was a totally unexpected failure.

It has been reported that there are about 90 banks currently on the secret watchlist.  That list will reportedly be updated at the end of next month, not that we will know the names of the endangered banks.

The FDIC insures individual accounts up to $100,000 and retirement accounts up to $250,000. 

So, we can’t blame everything on the government… but…

IndyMac is the third largest bank failure in the nation’s history.  And, of course, by now we all know that the bank has been taken over by the government.  Is that going to make us sleep better at night?  Probably not.

Over the weekend it was disclosed that the government has a list of banks that “they” are keeping an eye on.  The bank list is supposedly made up of those banks the government sees as being on the brink of failure, or at the very least leaning towards trouble.  We should be reassured to know that the government is watching out for us.  Supposedly, there are some ninety banks on the “watch list.”  Today I heard the number was 300.  Whatever the number, 90 or 300, the government is watching out for us. 

That sounds okay, I suppose.  That is until it was disclosed that IndyMac was NOT on the watch list.  No one was watching IndyMac.  It almost sounds as if the bank had no one watching until Friday.  The details of the Fed sweeping in and taking over the bank are sketchy at best.  But, what is important is that for all the “watch lists” and eyes on the prize talk we are getting from Washington, no one had an eye on IndyMac.  That makes me wonder how many other banks should be on a watch list and aren’t. 

Are the Main Street citizens satisfied that their money is safe now that IndyMac is now under federal control?  Apparently, not!

Nervous customers of IndyMac Bank today lined up at branches in Pasadena and elsewhere, anxious to withdraw their money from the failed institution that was seized by federal regulators late last week.

With some arriving as early as 4 a.m., fueled by coffee and packing lawn chairs and stools in anticipation of a lengthy stay, depositors waited for the bank to reopen at 9 a.m. It has been closed since Friday.

A spokesman for the FDIC walked up and down the line trying to reassure the depositors that their money was safe since the bank is now under government control. 

To calm customers’ fears, employees of the Federal Deposit Insurance Corp. — the bank’s new manager — made their way down the line, which wrapped twice in front of the building on Lake Avenue and stretched around the corner. They answered questions and explained the bank’s new policies.

“This right now is one of the strongest banks in the country,” said FDIC spokesman David Barr. But he acknowledged customers “just want to get their money — we understand that.”

So, how safe is the money?  That is the real question.

Yet not all customers would be able to access all of their funds. Customers with $100,000 or less in deposits or with $250,000 or less in a retirement account would have full access to their funds, which are insured by the federal government.

There are, however, an estimated 10,000 IndyMac depositors who had a collective $1 billion over federal insurance limits. In an unusual move, the FDIC said it would give those customers access to 50% of their uninsured deposits. Any additional payments would be made only if the sale of IndyMac assets proved sufficient.

For all depositors, interest rates on most individual accounts would remain unchanged until the accounts mature, the FDIC said. That’s good news for many customers because IndyMac has been paying among the highest rates in the nation for certificates of deposit in recent months. As of last week, the bank was offering an annualized 4.3% on a six-month CD.

Maybe everything will work out.  Let’s hope so.  But, who can blame anyone for leaving no more than $100,000 in a single bank? 

This isn’t the first bank to fail since the economic crisis began.  According to Reuters, UK

July 11 - IndyMac Bancorp taken over by U.S. regulators. Total assets of $32.01 billion and total deposits of $19.06 billion as of March 31. Estimated cost to FDIC insurance fund between $4 billion and $8 billion.

May 30 - First Integrity Bank closed by regulators. First International Bank and Trust takes over all of the Minnesota-based bank’s deposits. First Integrity held $54.7 million in assets and $50.3 million in total deposits.

May 9 - ANB Financial NA closed by U.S. regulators. Pulaski Bank and Trust Co takes over the insured deposits. ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.

March 7 - Hume Bank closed by U.S. regulators. Security Bank takes over insured deposits. Hume had total assets of $18.7 million and total deposits of $13.6 million.

January 25 - Douglass National Bank closed by regulators. Liberty Bank and Trust Co takes over all deposits. Douglass had $58.5 million in total assets and $53.8 million in total deposits.

So, I guess we will all rest better tonight.  Besides, it’s all psychological.

We all remember the melt down of Bear Stearns.  Other banks are trying to stay afloat by selling off assets.  Yesterday Citigroup announced it would sell of some $400 + Million in assets.

 Global banking giant Citigroup Inc, which has been battered by the subprime crisis, plans to sell assets worth $500 billion in the next two to three years.

Revealing Citigroup’s future plans to investors and analysts today, its India-born CEO Vikram Pandit said that many of these assets have attractive prices and the company is looking for risk reduction.

“We continue to believe in the right economic interest for the company,” he said during a conference call with investors and analysts today.

In the last two quarters, Citigroup has lost more than $14 billion primarily due to the US subprime crisis.

Earlier, Citigroup had posted 48 per cent drop in revenues at $13.22 billion during the first quarter ofthe current year, largely driven by significant write-downs in sub-prime related direct exposures in fixed income markets and highly leveraged finance commitments.

Little mention has made the headlines concerning our smaller banks.  Apparently, those who aren’t housed on Wall Street don’t get the same coverage.  However, many banks have thrived on Main Street, not Wall Street, until recently.  We are beginning to see that some of them are failing… without the big Fed bail out that Bear Stearns enjoyed.

This week it was reported that former Fed Chairman Alan Greenspan announced that in his view, it seems the worst is over.  It may be over as far as Wall Street is concerned, but still no one is looking at Main Street… or our smaller more local banks.

Federal regulators says they’ve closed ANB Financial National Association banks after discovering “unsafe and unsound” business practices there.

David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank’s nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.

Barr says Pulaski Bank and Trust Co. agreed to assume control over ANB Financial’s bank locations, which will be open Monday.

As of Jan. 31, federal regulators say ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.

It was the third closure this year of an FDIC-insured bank. Douglass National Bank, a Missouri bank with $58.5 million in assets, was shut in January; another Missouri institution with assets of $18.7 million, Hume Bank, was shut down in March.

Both were dwarfed in size of ANB Financial, where regulators found lax lending standards, mostly for construction and development loans for projects in Utah, Idaho and Wyoming, as well as Arkansas.

These smaller banks are finding that they, like the big boys, are caught up in the subprime mortgage fiasco.  While Citigroup and others can sell of their expansive assets, the smaller banks are left to sink or be closed by the FDIC. 

Okay… so we are talking about three banks… so far.  And, don’t think the Fed isn’t watching.

Observers have been watching for signs of bank distress resulting from the mortgage crisis. Profits at federally insured U.S. banks and thrifts plunged to a 16-year low in the fourth quarter as institutions set aside a record-high amount to cover losses from sour mortgages.

Are there other small banks on the brink of failure?  More than likely.

The FDIC is planning to beef up its staff, including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks. They will handle an anticipated increase in bank failures.

Think about what that means for Main Street and Elm Street and Oak Road… and your street.