From the end of March to the end of June, problem banks, as they are defined by the FDIC, rose from 90 to 117. These are banks with a high percentage of "non-current" loans.
The trouble is that the agency may not have enough money to cover the possible upcoming bank closings. So the FDIC said it "might have to borrow money from the Treasury Department to see it through an expected wave of bank failures," according to The Wall Street Journal.
At least two implication arise from this. The most obvious is that the credit crisis is spreading. More banks are having trouble with mortgage, business and commercial real estate loans. Given the spreading effects of the recession, that is not odd.
The other is the extent to which the taxpayer will be hit because of lax bank management. Money from the Treasury is eventually money from every man, woman and child in the country. But who cares? After bailouts of banks and brokerages and possible help for car companies, what is a few more billion?
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
8-27-2008 @ 9:52AM
al coholic said...
Well, we sucked it up and weathered the S&L crisis and it looks like we will have to do it again.
I'm just guessing but if the FDIC had unlimited funds a number of those 117 would already have been taken over. As it is, with a very limited war chest they are forced react at the last minute when there is a CNN news crew documenting a run on a bank instead of stepping in earlier, making it at least appear that they are on top on things.
In their defense I think the FDIC has a good handle on the financials of these iffy banks but are forced to stand back and let them fail.
8-27-2008 @ 1:14PM
Kevin Pierce said...
WHAT'S IN YOUR WALLET?
NEWSWIRE--A Kansas bank has become the ninth closed by federal regulators this year, amid bad real estate loans and falling housing prices.
Not dollars or drachma or krona or kips,
No sheqel or shilling or rand,
Not ruble or rupee or money in clips:
No sawbuck, a fifty, a grand.
Not penning or fenning or guilder or gold,
No euro or florin or francs,
What we're counting today is not bills that will fold,
But banks.
www.newsandverse.com
Light verse, ripped from the headlines
8-28-2008 @ 4:59PM
JACK said...
The House of Rothschild bought Reuters news service in the 1800's. Within the last 20 years, Reuters bought the Associated Press. Now the Elite own the two largest wire services in the world, where most newspapers get their news. The Rothschilds have control of all three U.S. Networks, plus other aspects of the recording and mass media industry according to research by Eustice Mullins in his book 'Who Owns the TV Networks'