Friday, April 12, 2013

This Week in Bank Failures

This week, two cases of banks not being what they seem.

First: In Spain, two insolvent banks own commanding positions in the country’s olive oil industry. The banks now need to find a way to sell their olive oil interests to help pay for their banking debts.

Second: Statistics and reports have come out that paint a picture of a run on Cyprus banks that went on for a month, perhaps two months, before the EU rescue and is surely continuing now, subject to the limits of the currency controls. Much of the money taken out of Cyprus banks in March was deposited in banks in Greece. The Cyprus banks and government and the ECB managed to keep this story under wraps at the time.

Cyprus’ shell-shocked economy will need some kind of intervention to keep people from getting discouraged. This year’s big shift may be described as a move away from offshore banking and toward more subsistence farming.

In Virginia, the NCUA liquidated a credit union. Shiloh of Alexandria Federal Credit Union was a church-affiliated credit union with 624 members. At the end, it had $2 million in assets.