Like WaMu, the FDIC brokered most of Colonial’s burden onto another bank’s balance sheet. BB&T (NYSE:BTT) picked up the lion’s share. And just like the WaMu/JP Morgan (NYSE:JPM) deal, the FDIC greased the gears by including some kind of backstop provision. In this case, BB&T and the FDIC (read: your tax revenues) will enter a loss sharing agreement on $15 billion in shaky Colonial assets.

Colonial’s failure took a $2.8 billion chunk out of the FDIC’s deposit insurance fund. With just $13 billion left — at best — the fund is at its lowest level since 1993. Along with four other banks that failed over the weekend as well, the FDIC has closed 77 banks this year. One more and we’ve tripled last year’s count.

“The FDIC has been tardy in resolving banks and cleaning them up,” says Dan Amoss, “which will result in higher costs to the FDIC in the long run. Plus, with these ‘loss sharing’ deals (Colonial/BB&T), the FDIC is putting off the recognition of losses over a period of years, and its estimates of ultimate losses will likely be low, whether they’re ultimately absorbed by the deposit insurance fund or acquiring banks like BB&T.

“A perfect example is Integrity Bank in Georgia, which should have been shut down long before it was allowed to attract new deposits with high CD rates.

“Also, note to readers: If your CD rates seem too good to be true, your bank may not be healthy, and you may have to deal with the hassle of not accessing your money while the bank is resolved.”

Source: More Bad Banking News

For the tale of the tape, the TSX Exchange gained 0.76%, while the TSX Gold Index added 1.3% and the TSX Venture Exchange, Canada’s largest junior exploration bourse, dropped 0.48% with the declining issuers once again out pacing the advancers this time by a 577 to 470 margin on big volume of 250 million shares traded.

Canada’s third-biggest zinc and copper producer, HudBay Minerals (HBM) is offering up 0.61 of its shares for each Skye Resources (SKR) share. HudBay would also buy around 12.7 million shares of Skye at a price of C$7.51 per share in a private placement. At the end of the day, HudBay would have 160.9 million outstanding, of which Skye shareholders would have 20.3 percent. Skye has agreed to pay a break fee of $14 million to HudBay if another takeover offer prevails. Of interest is Skye’s Fenix nickel project in Guatemala. Fenix is slated to go into production in the second half of 2009 at a developing cost of C$1.1 billion and would mark HudBay’s first foray into nickel. HudBay ended the day down C$0.78 at C$14.01, while Skye added C$0.98 to close at C$8.70.

The big winner of the session was Weststar Resources (WER), which added C$0.73 to close at C$1.06. The junior inked a letter of intent to acquire 72 coal permit applications some 70 kilometres northwest of the recent coal discovery of Goldsource Mines (GXS), near Hudson Bay Saskatchewan.

Shares of Bitterroot Resources (BTT) continued to climb on speculation that the company is acquiring three coal permits in Manitoba. Bitterroot gained C$0.10 to close at C$0.93.

Meanwhile away from the red hot coal sector, Tarsis Capital (TCC) reported that the first hole drilled at the Discovery Horizon on its Mor property in the Yukon intersected massive, semi-massive and disseminated sulphide mineralization from 95.09 to 103.48 metres. Another narrow interval of intermittent semi-massive, disseminated and wispy sulphide bands comprising coarse pyrite and lesser chalcopyrite and magnetite was cut between 139.63 and 144.76 metres. Results pending and drill rig turning. Thinly traded Tarsis ended the day up C$0.06 to C$0.45.

The roller coaster ride continues for investors in the Canadian Markets. We will see what Tuesday trading has in store.

Source: Resource Stock Roundup Tuesday, June 24, 2008