US bank failures top 100 for year

Gezzer · Posted: Sun Oct 25, 2009 9:41 am Post subject: US bank failures top 100 for year

Quote:

US bank failures top 100 for year

The number of US bank failures this year has topped more than 100 after US federal regulators shut down a trio of small Florida banks.

Bank failures have cost the Federal Deposit Insurance Corporation (FDIC) fund that insures deposits an estimated $25bn this year.

http://news.bbc.co.uk/1/hi/business/8323565.stm

the year has not ended, just yet
and the banking bonus culture is back in full swing

here we go again …

xavierx · Joined: Nov 06, 2004 Posts: 5427

Actually, the bonuses appear to have nothing to do with the bank failures.
http://www.reuters.com/article/topNews/idUSTRE59M5GT20091024?feedType=...&fe

Quote:

The number of U.S. bank failures this year reached 106 on Friday, when regulators closed seven more small banks, marking the highest annual level of failed institutions since 1992 during the savings and loan crisis.
...
Banks are still cleaning up their balance sheets from the recent credit boom that fueled banks' appetite to extend loans, many with poor underwriting and triggers that caused borrowers' payments to spike to unaffordable levels.

Community banks, especially, built up high concentrations of commercial real estate loans for developments that have failed to attract tenants or have become vacant.
...

The issue appears to be bad investments on the part of the small banks. They, like many people, bet on the housing bubble, and when it burst, they started to fail.

I've seen exactly what they're talking about in my own town. We have a 100+ unit condo complex that is nearly vacant (despite being riverside), another that has been approved but not built, and a huge stretch of land that was clear-cut to build a 900+ unit development and 18 hole golf course, but is now for sale, all because the housing bubble burst. And for that, we've already discussed here that Congress (all parties) are to blame.

The bonuses are a completely separate issue. The ones who were getting big bonuses are in the banks that were too big to fail - these failed banks are mostly small, community banks, and we apparently don't care about them (they're small enough to fail, I guess).

Gezzer

xavierx · Joined: Nov 06, 2004 Posts: 5427

Gezzer

CowpokeBob

Just food for thought...There were 120 bank failures in 1992 at the end of the S&L crises vs 106 so far this year.

This time around the S&L's are doing quite well since they were reformed after the '92 crises. Not making light of the extent of the problem but just pointing out that the banking industry as a whole was not ever on the verge of collapse as has been mentioned on occasion and it has actually suffered worse losses in the past. Without the government taking control of banks. As I mentioned in another thread the issue is that there is a lot of bad assets (toxic assets) still out there. The ones the TARP was supposed to buy up instead of bank stocks and controlling interests. Until they are dealt with this banking and credit crises will drag on.

Also the matter of corporate bonuses is totally unrelated to the problems of credit worthiness the banks are currently suffering from. Those bonuses were derived from different divisions within the bank that are themselves actually doing quite well financially. To me preventing them it is akin to amputating a leg because the foot has gangrene.

Anyway if anyone is interested here is a chronology of the '92 banking crises. There is a lot of similarity to this crises and in that case Gezzer is correct when he says here we go again.

http://www.fdic.gov/bank/Historical/s&l/