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| Economy |
| Bank failures drain FDIC insurance - Fund in red for only 2nd time |
| 2009-10-18 |
| Nearly 100 banks have failed so far this year, pushing the Federal Deposit Insurance Corp.'s insurance fund into the red for only the second time since its founding in 1933. As the worsening commercial real estate debacle continues to ravage the balance sheets of thousands of mostly small and medium-sized banks, analysts expect hundreds more could fail before the problem abates. "While banks and thrifts are now well along in the process of loss-recognition and balance-sheet repair, the process will continue well into next year, especially for commercial real estate," FDIC Chairman Sheila C. Bair told the Senate Banking, Housing and Urban Affairs financial institutions subcommittee last week. "We expect the numbers of problem banks and failures will remain elevated, even as the economy begins to recover," Mrs. Bair said when she revealed in late September that the insurance fund's net worth turned negative. Problem banks and bank failures "tend to be lagging economic indicators," she said. Mrs. Bair put those failures in perspective on Friday by noting that more than 500 financial institutions collapsed in 1989. This year's 99 bank failures have already cost the FDIC more than $25 billion. That's on top of the nearly $20 billion in costs absorbed by the federal agency from the 25 banks that failed last year. The recession has so devastated the FDIC's deposit insurance fund that the agency has had to take the unprecedented step of requiring banks to prepay $45 billion of insurance premiums by the end of this year in order to replenish the FDIC's coffers. The premiums would cover the fourth quarter of this year and all of 2010, 2011 and 2012. As recently as May, the FDIC estimated that bank failures from 2009 through 2013 would cost the agency $70 billion. In late September, the FDIC increased that estimate by more than 40 percent to $100 billion. The $100 billion projection is "about right, unfortunately," said Scott Talbott at the Financial Services Roundtable, a banking trade group that supports the FDIC's prepayment plan. The deposit insurance fund's balance at the end of June was $10.4 billion, down from more than $45 billion a year ago. It is this balance that turned negative at the end of the third quarter; final figures are not yet available. |
| Posted by:Throluck Glomble2595 |
| #5 Redneck Jim: No, one bank in California was closed on Friday, which meant 99 banks in the US had closed. Here is the closure list: http://www.fdic.gov/bank/individual/failed/banklist.html However, some 1800 banks are still at risk, including the megabanks CITI and Bank of America. Here are some of the worst of the worst that are still outstanding: http://www.calculatedriskblog.com/2009/08/problem-bank-list-unofficial-aug-21.html |
| Posted by: Anonymoose 2009-10-18 18:53 |
| #4 It doesn't help that the FDIC has directed the small banks to fork over 3 years advance insurance payments. It's almost like they want them to fail so that the bigger banks with creative balance sheets will be 'covered'. |
| Posted by: Procopius2k 2009-10-18 13:34 |
| #3 Most of the years failure have been quite small banks. MOST banks (all sizes) would probably be in failure right now if they were honestly accounting for their non-performing loans. |
| Posted by: Glenmore 2009-10-18 13:26 |
| #2 may be a "branches" vs "banks" thing |
| Posted by: Frank G 2009-10-18 12:51 |
| #1 Nearly 100 banks have failed so far this year, Yesterday it was reported here that 99 California banks failed. Were there NO other bank failures in the entire nation? I suspect the figure's both false and low. |
| Posted by: Redneck Jim 2009-10-18 12:42 |