Almost 100 Banks are closed in the US

As of Oct 3, three more banks joine the failed league, bringing the total to 98 this year. Regulators continue to shutter financial institutions that are overwhelmed by bad loans and liquidity problems.

According to a just released Reuters report,the Federal Deposit Insurance Corp said that Warren Bank in Michigan was closed, with Huntington National Bank of Ohio taking over its deposits. It had US$538 million (RM1.9 billion) in assets and US$501 million in deposits.

Jennings State Bank in Minnesota was also shut down, with Central Bank in that state assuming its deposits. It had US$56.3 million in assets and US$52.4 million in deposits.

The third bank closed by bank regulators was Southern Colorado National Bank, with Legacy Bank in the state taking over its deposits. It had US$39.5 million in assets and US$31.9 million in deposits.

All the branches of the institutions will open today under their new owners and customers can continue to use cheques, automated tellers and debit cards to access their funds.

Combined, the three latest failures are expected to cost the FDIC's insurance fund a total of about US$293 million.

Earlier this week the FDIC took steps aimed at shoring up the depleted insurance fund by proposing that banks prepay three years of their regular assessments.

The insurance fund's balance dipped negative as of this week, as a spike in bank failures have been draining the FDIC's resources. The agency said it expects the total bill for bank failures to come to US$100 billion from 2009 through 2013.

The prepayment of assessments will give the FDIC an additional US$45 billion in liquidity, and was seen as an attractive alternative to charging banks a hefty special fee.

Banks will prepay the assessments at the end of this year, but not have to recognise the fees as an expense on their books until they are normally due.

The FDIC insures accounts up to US$250,000, and notes that those deposits are fully protected, despite a negative insurance fund balance.

The agency also has the option of tapping a US$500 billion line of credit with the US Treasury. It last borrowed from Treasury during the savings and loan crisis of the late 1980s and early 1990s.

The FDIC said it expects failures to peak in 2009 and 2010, and that industry earnings will recover in 2011. Chairman Sheila Bair has said failures are a lagging indicator, and that the banking industry will continue to suffer, even as the economy shows encouraging signs of healing.

Looks like the American financial system is further assailed by the hidden spiraling forces of the sub-prime after almost a year of the collapse of the Lehman Brothers.

Shocking US Unemployment Statistics

U.S. September unemployment rate hit the highest level since June 1983 and payrolls had now dropped for 21 consecutive months.

The U.S. Labor Department posted that U.S. employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 percent. The report fueled fears the weak labor market could undermine economic recovery.

Meanwhile, U.S. factories orders fell 0.8 percent in August, worse than economists' expectation, reported the Commerce Department on Friday. The decline followed a 1.4-percent July increase. Economist had expected that the demand for manufactured goods might grow 0.7 percent in August.

Analysts said that factories will remain under pressure because of weak consumer spending as American households deal with the rising unemployment.

Poor Broadband Quality?

KUALA LUMPUR, Oct 2 – Malaysia was ranked a poor 48 out of 66 countries for Internet broadband quality in a study conducted by Oxford University and sponsored by Cisco.

The global study on broadband quality conducted by Oxford’s Said Business School listed Malaysia among countries which had Internet speeds which were “below today’s applications threshold.”

Malaysia is listed in the same category but above countries like the United Arab Emirates, Philippines, Pakistan, Morocco, Vietnam and Indonesia. China, Malta, Brazil and Thailand are among countries just ahead of Malaysia in broadband quality but still in the same low category.

Countries like Singapore, Britain, Australia, Spain, Turkey and the Ukraine were listed above Malaysia as having Internet speeds “meeting needs of today’s applications.”

Switzerland, the United States, Russia, Taiwan and Hong Kong “comfortably enjoy today’s applications. Crucially, Korea, Japan, Sweden, Lithuania, Bulgaria, Latvia, Netherlands, Denmark and Romania were identified as countries with broadband speeds that were “ready for tomorrow.”

The study was conducted between May and July this year and Broadband Quality Scores (BQS) were awarded based on 24 million records sourced from speed tests.

A similar study conducted last year established that download speeds of 3.75 Mbps and upload of 1 Mbps was the quality requirement needed for today’s applications such as social networking, video steaming, video chatting and file sharing.

For what was classified as “tomorrow’s requirements” speeds of 11.25 Mbps for downloads and 5 Mbps for uploads was needed for visual networking, HD video streaming, consumer telepresence, large file sharing and HD IPTV applications.

According to the study, the research team had found that broadband quality was linked to social and economic benefits and that countries with high broadband quality have broadband on their national agenda.

In a statement earlier today, the DAP’s Lim Kit Siang described the study as confirmation of Malaysia’s unchecked plunge in international IT competitiveness.

“Internationally, broadband quality has moved from one of penetration, i.e. who had broadband connection and who did not, to broadband speed but Malaysia is till bogged down in the initial stage.

“Some six months ago, when Datuk Dr Rais Yatim was also appointed Communications Minister apart from his other portfolios of Information, Culture and Arts, I had called on him to give top priority to turn Malaysia into a broadband power, both in broadband penetration rate as well as in broadband speed if Malaysia is to enhance its competitiveness to take its rightful place in the global arena.

“I had asked what Malaysia’s national average broadband speed was, because nobody was talking about 2Mbps – we are lucky if we get 512 or 256kbps without disruption!”

Malaysians in selected areas will get access to high-speed broadband only by the first quarter of next year.

Residents of Taman Tun Dr Ismail, Bangsar, both in Kuala Lumpur, Subang Jaya and Shah Alam have been promised broadband speeds of 10 Mbps and above under the High-Speed Broadband (HSBB) project.

Residents in high-worth economic zones such as the rest of the Klang Valley and Iskandar Malaysia are expected to get the service later with 1.3 million households expected to have access by 2012.

The HSBB project is a public-private partnership between Telekom Malaysia and the government. Telekom is expected to invest RM8.9 billion of its own funds while the government will put in RM2.4 billion.

Telekom has so far claimed RM290 million from the government for work done.

Malaysia currently lags behind advanced countries in terms of quality and affordability of its broadband offerings, which has been confirmed by the Oxford University study.

While some countries such as Japan, Hong Kong, South Korea, Sweden and Finland have been enjoying speeds up to 100 Mbps for several years now, most Malaysian still make do with speeds of 1 Mbps or less.

Recently, Singapore, China and Australia have also upped the stakes in this strategic sector and announced massive initiatives to wire up their countries with fibre optics.