First Two Bank Failures of 2009

FDIC (Federal Deposit Insurance Corp.) has announced National Bank of Commerce of Berkeley, Illinois and Bank of Clark County of Vancouver, Washington are closing.

Hartford Financial Spends $10 Million to Get $1.1 Billion

From Bloomberg:

Hartford Financial Services Group Inc. jumped 21 percent to $12.65. The insurer that lost 79 percent of its market value in the past two months said it's buying a Florida bank for $10 million to become eligible for federal rescue funds. Hartford expects to qualify for $1.1 billion to $3.4 billion under Treasury Department guidelines.

As Portfolio notes:

In a sign of how far we have come from the last banking fiasco, the S&L fiasco of the early 1990’s, as how as how deep the current financial crisis is, one of the nation’s biggest insurance companies wants to become a savings and loan.

Congratulations Taxpayers, You Now Own Part of Your Bank

The WSJ reports that the U.S. government is taking equity stakes in nine U.S. financial institutions: Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Bank of America, Citigroup, Wells Fargo, Bank of New York Mellon, State Street, and Merrill Lynch.

According to the WSJ:

Some of the big banks were unhappy about the government taking equity stakes, but acquiesced under pressure from Treasury Secretary Henry Paulson in a meeting Monday. During the financial crisis, the government has steadily increased its involvement in financial markets, culminating with a move that rivals the breadth of the government's response to the Great Depression. It intertwines the banking sector with the federal government for years to come and gives taxpayers a direct stake in the future of American finance, including any possible losses.

The government will purchase preferred stock, an equity investment designed to avoid hurting existing shareholders and deterring new ones. Such shares typically don't come with voting rights. They will carry a 5% annual dividend that rises to 9% after five years, according to a person familiar with the matter. By investing in several big firms at once, the government hopes to avoid placing a stigma on any one firm for getting government help.

One question immediately jumps out -- why don't taxpayers get voting rights?