Small and Midsize U.S. Banks Beginning to Struggle in Credit Crisis

The credit crisis is tightening the screws on thousands of small to midsize banks across the United States, squeezing local builders and businesses that depend on those lenders for financing.

Losses are mounting so rapidly at some of these banks that a small number of them, perhaps 50 out of the 7,500 nationwide, could fail over the next 12 to 18 months, analysts said. Some of the others are likely to shut branches or seek out mergers as the weakening economy strains their finances.

Small lenders are in far less danger than they were during the 1980s and early 1990s, when roughly 1,600 federally insured institutions failed during a savings and loan crisis. And unlike many bigger banks, they shied away from complex mortgage-linked investments and subprime home loans.

But the breadth and depth of the current troubles have caught bank executives by surprise.

Federal regulators are particularly concerned about the exposure of smaller banks to the commercial real estate market, which has begun to soften in some parts of the country.

“There were people in denial six to nine months ago,” said Keith D. Maio, the president of the National Bank of Arizona in Phoenix, a small bank owned by the Zions Bancorporation based in Salt Lake City. “I don’t know if anybody is in denial anymore.”

Federal regulators concerned about the health of the industry are stepping up regular bank examinations and forcing some lenders to bolster reserves. During the last four years, just four United States banks have failed.

Stock market investors see trouble brewing. Shares of small banks have tumbled in recent months, with the Standard & Poor’s midcap regional banking index sinking 20 percent from a year ago.

“The megabanks get all the headlines,” said Jaret Seiberg, a research analyst for the Stanford Group, a private wealth management and banking firm. “But this is causing a lot of trouble for the industry and it is going to persist for the next few years.”

Small banks have been losing business to larger rivals for years. Big banks have muscled them aside in the credit card and home mortgage businesses. In response, many small and midsize banks, typically defined as those with assets ranging from less than $1 billion and $20 billion, pushed into construction and commercial lending, betting that their local knowledge of markets would give them an edge.

The strategy paid off, delivering years of strong profit growth. But now, as real estate and construction loans sour, small lenders are starting to see their balance sheets pinched.

Mark T. Fitzgibbon, the director for research at Sandler O’Neil & Partners, said losses at smaller lenders might ultimately reach $105 billion, or 15 percent of what he projected could be $700 billion of losses industrywide.

“The real estate problem has gotten worse and more pervasive, more rapidly,” Mr. Fitzgibbon said. The rapid decline in home prices in areas like Florida and Southern California is just the start. “I think you will see that spread to other parts of the country soon,” he said.

Already, residential construction lending is running into trouble. As new homes have become harder to sell, developers are falling behind on payments, and are no longer seeking new loans.

For all public banks, the late loan payment rate rose in the fourth quarter to 4.11 percent of the total, up 76 percent from the third quarter and 142 percent from the first three months of 2007, according to a Stanford Group analysis.

And the problems are likely to get worse. Some home builders are rapidly drawing down so-called interest reserves, the extra cash cushion built into a loan that is intended to protect banks by ensuring that borrowers can pay back interest. Reserves for loans for construction projects that started before the credit crisis will start running out in the next six months. Small business loans could be next.

“We are seeing an uptick in nonperforming loans to small businesses — the local retail stores, service providers, dentists, vets — but off of historically low rates.” said Steven D. Fritts, associate director for risk management policy for the Federal Deposit Insurance Corporation.

Federal banking regulators are particularly concerned about small banks’ exposure to commercial real estate.

In the last six years at community banks, the ratio of commercial real estate loans to capital, a measure regulators use to monitor loan exposure, nearly doubled to a record 285 percent, according to data from the federal Office of the Comptroller of the Currency. Nearly a third of all community banks exceed 100 percent of their capital.

Granted, most banks report that their loan portfolios are holding up and actual delinquencies remain near all-time lows. But over all, the number of borrowers falling behind is growing.

Timothy W. Long, head of supervision for midsize and community banks at the office of the comptroller, said regulators were monitoring lenders closely. He said the industry had not experienced this tough a period in years.

“I would tell you a lot of bankers out there have never had a loan charged off,” Mr. Long said. “The last time we went through this, the loan officers were in junior high.”

आपकी स्किन भी खराब कर सकता है मोबाइल

मोबाइल फोन से निकलने वाला रेडिएशन आपकी स्किन पर भी असर डालता है। नई रिसर्च से यह पता चला है। अभी तक माना जाता है कि सेलफोन का रेडिएशन सिर्फ दिमाग पर असर डालता है। इससे ट्यूमर तक हो सकता है।

फिनलैंड में वैज्ञानिकों की एक टीम ने फोन के रेडिएशन पर रिसर्च की। उन्होंने बताया कि इस रेडिएशन के कारण शरीर पर बायॉलजिकल असर पड़ता है। लेकिन यह काफी कम होता है। फिनलैंड की रेडिएशन एंड न्यूक्लियर सेफ्टी अथॉरिटी के प्रमुख रिसर्चर डैरिस लेशिंस्की के मुताबिक, मोबाइल के रेडिएशन जीवित टिश्यूज को प्रभावित करते हैं। इसकी वजह से लोगों में प्रोटीन एक्सप्रेशन में बदलाव आ जाता है।

इस नतीजे पर पहुंचने के लिए रिसर्च के दौरान 10 लोगों के हाथों के एक हिस्से पर एक घंटे तक जीएसएम मोबाइल के सिग्नल डाले गए। इसके बाद सिग्नल से प्रभावित हिस्से और बाकी हिस्से की बायोप्सी की गई। दोनों हिस्सों के प्रोटीन की भी जांच की गई। करीब 580 प्रोटीनों की जांच से पता चला कि इनमें से 8 पर काफी असर पड़ा।

लेशिंस्की का यह भी कहना है कि इस रेडिएशन से सेहत पर पड़ने वाले असर के बारे में अभी कुछ कहना जल्दबाजी होगी। यह स्टडी मोबाइल रेडिएशन का सेहत पर प्रभाव जांचने के लिए नहीं की गई थी। हमारा मकसद यह पता लगाना था कि इस रेडिएशन से शरीर की स्किन के प्रोटीनों पर क्या असर होता है। उन्होंने बताया कि बड़े पैमाने पर यह स्टडी की जानी है, जो 2009 में शुरू हो सकती है।

Watch out, your PC might be at risk

A new category of computer attacks may compromise memory systems touted as foolproof, particularly in laptops, a recent study has found. The study, by researchers at Princeton, found these attacks overcome “disc encryption”, a broad set of security measures meant to protect information stored in a computer’s permanent memory.

The researchers cracked widely-used technologies like Microsoft’s BitLocker, Apple’s FileVault and Linux’s dm-crypt.

They described the attacks in a paper and video published on Thursday on the web.

The team said these attacks are likely to break through other disc encryption systems because these technologies have similar structural features.

The attack is particularly effective against computers that are turned on but are locked, such as laptops in “sleep” or hibernation mode.

One effective countermeasure is to turn a computer off entirely, though in some cases even this does not guarantee protection.

“We’ve broken disc encryption products exactly when they seem to be most important these days: laptops that contain sensitive corporate data or personal information about business customers,” said Alex Halderman of Princeton’s computer science department.

Halderman’s Princeton collaborators included graduate students Nadia Heninger, William Clarkson, Joseph Calandrino, Ariel Feldman and Professor Edward Felten of the Centre for Information Technology Policy.

The findings show risks associated with recent high-profile thefts, including a Veterans Administration computer containing information on 26 million veterans and a University of California, Berkeley laptop that contained information on more than 98,000 graduate students and others, said Felten. The team wrote programmes that gained access to essential encryption information automatically after cutting power to machines and rebooting them.

“This method is extremely resistant to countermeasures that defensive programmes on the original computer might try to take,” Halderman said.

It’s the Mileage That Moves You

TESTED 2008 Ford Escape Hybrid

WHAT IS IT? Car-based crossover S.U.V. with a hybrid powertrain for better fuel economy.

HOW MUCH? $27,170 with front-wheel drive, including destination charge. As tested, $31,060 including $2,695 for navigation system and $1,195 for a package with heated front seats and leather upholstery. (All-wheel-drive version starts at $28,920.) A $3,000 federal tax credit is available.

WHAT MAKES IT RUN? A 2.3-liter 155-horsepower 4-cylinder engine assisted or temporarily replaced by an electric motor. Batteries are recharged as the Escape is driven. Transmission is a continuously variable automatic.

HOW MUCH CAN IT HOLD? Five people in theory, but disharmony is likely unless three are children.

HOW THIRSTY IS IT? For a small S.U.V., not very. The E.P.A. estimate is 34 m.p.g. city and 30 m.p.g. highway, which compares with 20/26 for a conventional front-drive Escape with a 4-cylinder engine and a 4-speed automatic transmission. In one 608-mile stretch of generally flat Interstate I cruised between 55 and 65 m.p.h. and averaged 29 m.p.g.

ALTERNATIVES Saturn Vue Green Line ($25,995) or the Escape Hybrid’s close relatives: the Mercury Mariner Hybrid ($27,860) and Mazda Tribute Hybrid ($25,945; sold only in California).

FORD introduced the Escape Hybrid as a 2005 model and it was a landmark, the first hybrid S.U.V. In addition, it was (and is) a full hybrid, meaning that the electric motor was powerful enough to move the vehicle on its own — at least for a while.

For 2008 Ford has given the Escape a new look, redone the interior and retuned the suspension.

The interior has a lot of hard plastic, so it feels like a project undertaken by a company desperately trying to save money. That is, of course, exactly the case. In addition to the powertrain, another environmentally friendly feature is what Ford says is standard seat upholstery made of recycled materials.

As with most hybrids, the key to good fuel economy is a small engine that gets a boost from an electric motor when more power is needed. For 2008 Ford says it tried to make the interaction more seamless, and indeed the electric motor’s comings and goings are unobtrusive.

At times, however, the 4-cylinder works hard despite its little electric buddy. Traveling at 65 m.p.h. through the hills of northern Pennsylvania, I found the gas engine often churning away at 4,300 revolutions a minute, too high for good fuel economy.

Over the last decade, Ford has generally turned out vehicles that are responsive and fun to drive. But that Blue Oval magic eluded the ’08 Escape Hybrid. It comes across as amenable and competent — but not dynamically charming.

Ford boasts that the Escape Hybrid has so much standard safety equipment that “it bolsters its safety leadership.” Yet the Escape is one of the few S.U.V.’s that lack — even as an option — an important life-saving feature, electronic stability control. Still, it has valuable items like side-impact air bags and air curtains that cover the side windows to provide head protection.

The navigation system was easy to use and did a fine job of giving directions not just across Pennsylvania to Michigan, but back to New Hampshire through Canada, which is almost like a foreign country.

But I found an important feature of the nav system to be a joke. Well, it wouldn’t have been a joke had I actually paid almost $2,700. While crossing Pennsylvania, I asked the system to search for hotels. Several times it told me nothing was available within a 40-mile range. Then, two or three minutes later, the little prankster would announce that a hotel was within a mile or two.

I finally stayed at a one-year-old hotel that the navigation system didn’t know about. I am not ruling out the possibility that I was deluded, but it seems more likely that the system’s information was already outdated.

Of course, it costs money to buy the newest data, and Ford appears not to have done so.

When Ford introduced the 2005 Escape Hybrid it broke new ground. Unfortunately, the automaker didn’t continue that tradition with the 2008 update, which comes across not as hot stuff, but as barely warmed-up leftovers.

Still, there’s no denying that for a small S.U.V. the fuel economy is great, which is actually the point.

You drink and they will drive

One man’s poison is another man’s business opportunity. When Mumbai’s traffic police launched their campaign against drunken driving last year, one man spotted just such a chance.
Hasan Momin, 45, is a driver with a travel agency in Vile Parle. Hasan would often read how hundreds of motorists were being caught and jailed for drinking and driving. “A thought struck me,” he says. “Why not provide drivers to these people who want to go out for a drink?”
Having worked as a driver for two years, Hasan knew 25-30 other drivers who would be willing to make some extra money. With no money to advertise, he began using the time-honoured method: word of mouth. “It took a couple of months for the word to spread, but as the traffic police drive got more intensive, requests started pouring in,” he says.
When a customer calls Hasan to request for a driver, he only has to decide whom to send. “If a customer is from the western suburbs, I send a driver residing in that area,” he says. “I only provide the driver. The vehicle is the customer’s.”
Hasan does not charge a commission from the drivers he sends. “I am happy that my fellow drivers are making some extra money,” he says. Turn to p9
But he chooses his drivers with care, recommending only those who are experienced and whose background he has checked thoroughly. A driver who is new to the city is never recommended.

A Method for Critical Data Theft

A group led by a Princeton University computer security researcher has developed a simple method to steal encrypted information stored on computer hard disks.

The technique, which could undermine security software protecting critical data on computers, is as easy as chilling a computer memory chip with a blast of frigid air from a can of dust remover. Encryption software is widely used by companies and government agencies, notably in portable computers that are especially susceptible to theft.

The development, which was described on the Thursday, could also have implications for the protection of encrypted personal data from prosecutors.

The move, which cannot be carried out remotely, exploits a little-known vulnerability of the dynamic random access, or DRAM, chip. Those chips temporarily hold data, including the keys to modern data-scrambling algorithms. When the computer’s electrical power is shut off, the data, including the keys, is supposed to disappear.

In a technical paper that was published Thursday on the Web site of Princeton’s Center for Information Technology Policy, the group demonstrated that standard memory chips actually retain their data for seconds or even minutes after power is cut off.

When the chips were chilled using an inexpensive can of air, the data was frozen in place, permitting the researchers to easily read the keys — long strings of ones and zeros — out of the chip’s memory.

“Cool the chips in liquid nitrogen (-196 °C) and they hold their state for hours at least, without any power,” Edward W. Felten, a Princeton computer scientist, wrote in a Web posting. “Just put the chips back into a machine and you can read out their contents.”

The researchers used special pattern-recognition software of their own to identify security keys among the millions or even billions of pieces of data on the memory chip.

“We think this is pretty serious to the extent people are relying on file protection,” Mr. Felten said.

The team, which included five graduate students led by Mr. Felten and three independent technical experts, said they did not know if such an attack capability would compromise government computer information because details of how classified computer data is protected are not publicly available.

Officials at the Department of Homeland Security, which paid for a portion of the research, did not return repeated calls for comment.

The researchers also said they had not explored disk encryption protection systems as now built into some commercial disk drives.

But they said they had proved that so-called Trusted Computing hardware, an industry standard approach that has been heralded as significantly increasing the security of modern personal computers, does not appear to stop the potential attacks.

A number of computer security experts said the research results were an indication that assertions of robust computer security should be regarded with caution.

“This is just another example of how things aren’t quite what they seem when people tell you things are secure,” said Peter Neumann, a security researcher at SRI International in Menlo Park, Calif.

The Princeton researchers wrote that they were able to compromise encrypted information stored using special utilities in the Windows, Macintosh and Linux operating systems.

Apple has had a FileVault disk encryption feature as an option in its OS X operating system since 2003. Microsoft added file encryption last year with BitLocker features in its Windows Vista operating system. The programs both use the federal government’s certified Advanced Encryption System algorithm to scramble data as it is read from and written to a computer hard disk. But both programs leave the keys in computer memory in an unencrypted form.

“The software world tends not to think about these issues,” said Matt Blaze, an associate professor of computer and information science at the University of Pennsylvania. “We tend to make assumptions about the hardware. When we find out that those assumptions are wrong, we’re in trouble.”

Both of the software publishers said they ship their operating systems with the file encryption turned off. It is then up to the customer to turn on the feature.

Executives of Microsoft said BitLocker has a range of protection options that they referred to as “good, better and best.”

Austin Wilson, director of Windows product management security at Microsoft, said the company recommended that BitLocker be used in some cases with additional hardware security. That might include either a special U.S.B. hardware key, or a secure identification card that generates an additional key string.

The Princeton researchers acknowledged that in these advanced modes, BitLocker encrypted data could not be accessed using the vulnerability they discovered.

An Apple spokeswoman said that the security of the FileVault system could also be enhanced by using a secure card to add to the strength of the key.

The researchers said they began exploring the utilities for vulnerabilities last fall after seeing a reference to the persistence of data in memory in a technical paper written by computer scientists at Stanford in 2005.

The Princeton group included Seth D. Schoen of the Electronic Frontier Foundation, William Paul of Wind River Systems and Jacob Appelbaum, an independent computer security researcher.

The issue of protecting information with disk encryption technology became prominent recently in a criminal case involving a Canadian citizen who late in 2006 was stopped by United States customs agents who said they had found child pornography on his computer.

When the agents tried to examine the machine later, they discovered that the data was protected by encryption. The suspect has refused to divulge his password. A federal agent testified in court that the only way to determine the password otherwise would be with a password guessing program, which could take years.

A federal magistrate ruled recently that forcing the suspect to disclose the password would be unconstitutional.

स्मोकर्स से शादी नहीं करना चाहती लड़कियां

स्मोकिंग करने वालों के लिए एक और बुरी खबर है। अब यह लड़कियों को भी आपसे दूर भगाती है। गैर सरकारी संगठन सलाम बॉम्बे फाउंडेशन की ओर से कराए गए एक सर्वे के मुताबिक कम से कम 75 फीसदी लड़कियां स्मोकिंग करने वाले लड़कों से शादी करना पसंद नहीं करतीं। इसके अलावा, कम से कम 67 परसेंट लड़कियों को स्मोकर्स के साथ डेट पर जाना भी पसंद नहीं है।

आर्मेक्स कंसल्टेंट्स की इस स्टडी का टॉपिक था स्मोकिंग और तंबाकू सेवन पर युवाओं का अपने और अपने जीवनसाथी के प्रति रवैया। फाउंडेशन की अधिकारी देविका चड्ढा ने बताया कि 47 परसेंट युवा धूम्रपान या तंबाकू का सेवन करने वालों को अपने आसपास भी फटकने नहीं देना चाहते।

स्टडी के अनुसार 46.4 परसेंट लोग दोस्त-कॉलीग्स से स्मोकिंग सीखते हैं जबकि 30.4 फीसदी स्मोकर्स ने कहा कि वे टेंशन दूर करने के लिये ऐसा करते हैं।