775 BANKS ON ‘PROBLEM’ LIST

May 21, 2010 5:13 pm  

(The Wall Street Journal) – A total of 775 banks, or one-tenth of all U.S. banks, were on the Federal Deposit Insurance Corp.’s list of “problem” institutions in the first quarter, as bad loans in the commercial real-estate market weighed on bank balance sheets.

Poor loan performance in other sectors also continued to hurt banks, with the total number of loans at least three months past due climbing for the 16th consecutive quarter, FDIC officials said in a briefing on Thursday.

“The banking system still has many problems to work through, and we cannot ignore the possibility of more financial market volatility,” FDIC Chairman Sheila Bair said.

Access thousands of business sources not available on the free web. Learn More

There were 702 on the FDIC’s “problem” bank list at the end of 2009 and 252 at the end of 2008.

FDIC officials said they expected the number of failed banks to peak this year after climbing steadily over the past three years. Regulators have shut 72 banks so far this year, more than double the number closed by this time last year. Ms. Bair said regulators were preparing for a steady pace of additional closures through the end of the year. A total of 237 banks have failed since the beginning of 2008.

The failures continue to strain the FDIC’s fund to protect consumer deposits, although officials signaled they were confident they had enough cash on hand to deal with the expected spate of failures, without having to assess new fees on the banking industry. The agency’s deposit insurance fund stood at negative-$20.7 billion at the end of the first quarter, a slight improvement from the end of 2009.

“We have the necessary industry-funded resources to complete the cleanup,” Ms. Bair said, in a reference to the fees that the agency assesses on banks for insuring their deposits.

Banks, squeezed by problem loans and the continued recession, responded by reducing their lending. The industry’s total loan balances grew by 3% during the quarter, but the increase was due to accounting changes that required banks to bring securitized assets back onto their balance sheets. Without taking into account these accounting changes, lending would have declined for the seventh straight quarter, as banks cut back across most major lending categories.

“There is a lot of credit distress still in the mortgage-portfolio area,” FDIC Chief Economist Richard Brown said at the FDIC briefing.

FDIC officials said they saw some signs for optimism. The total $18 billion, first-quarter profit reported by U.S. banks and thrifts was the highest since the first three months of 2008 and more than triple the profit recorded in the first quarter of last year. More than half of insured banks reported growth in net income during the quarter

Some Democrats running against the president
Foreign 'terrorists' breach U.S. border

Top Stories

Liberal Steal: Bernie Wins Indiana, Clinton Wins the Delegates Exclusive report exposing how the Democrat delegate system is rigged for the elite (Infowars) - Join David Knight during the 4th hour of overdrive ...
Obama Looks to Ban Social Security Recipients from Owning Guns ALERT - The desperate last days of Barack Obama will be marred with gun grabbing and all-out attempt to eliminate the Second Amendment. A word of ...
VALERIE JARRETT WEIGHS IN ON ’N WORD’ (Breitbart) - White House Chief of Staff Valerie Jarrett says that she doesn’t use the “n word” — a term used by comedian Larry Wilmore while...
Cruz Event in Indiana Canceled Because Plane ‘Too Big’... 'That's a good argument for a longer runway at the airport' (USA Today) - Is Sen. Ted Cruz too big for small towns? No, but his plane might be. ...
Roger Stone: Party Bosses Trying to Stop Trump in Indiana Delegat... (Breitbart) - Veteran political operative and Donald Trump supporter Roger Stone said on Breitbart News Saturday on Sirius/XM Channel 125 that “Re...
KY Confederate Monument to be Removed After 120 Years (Kentucky.com) - A Confederate monument capped with a statue of Jefferson Davis will be removed from a spot near the University of Louisville campus w...

Comments


Please help us stay spam-free. Mouse over a spam post and click the X to report spam.