Venture Bank of Lacey, WA was added to the FDIC Failed Bank List sometime tonight. They had total deposits of approximately $903 million and an estimated hit to the FDIC fund of $298 million. This involves another one of those loss share agreements that are the ultimate sign of FDIC desperation. This one was with First-Citizens Bank & Trust Company of Raleigh, North Carolina on approximately $715 million of Venture Bank’s assets.

I learned something today. The FDIC is pressuring banks in these loss share agreements to perform mortgage modifications that wouldn’t otherwise be in the banks best interest. Apparently if the banks make enough of an effort, the FDIC will consider the incurred losses as covered losses. This is good news for these banks, as they want as much as possible to be covered by the agreements. But, in the abstract, this is rather interesting. The FDIC doesn’t have any money, and doesn’t have authority to do this with borrowed money (the money borrowed from the Treasury without a special act of Congress can only be used to insure deposits). Not that this wouldn’t be a popular move, but it’s not exactly an example of transparency in policy either. As I said, interesting.