The FDIC took over two more banks. According to The Wall Street Journal (subscription required), "The Office of the Comptroller of the Currency, a division of the Treasury Department, revoked the charters of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. The FDIC was appointed receiver of both banks." The Nevada bank had over $3 billion in deposits.
Current estimates are that less than 100 banks will fail during the current credit crisis, a much smaller number than closed during the saving and loan debacle of the late 1980s.
But, those estimates may be low. Bill Gross, an extremely prominent investor and head of Pimco, recently wrote that total losses related to the housing market will hit $1 trillion. About $450 billion of those write-downs have made it through the system. That leaves a potentially massive burden on the banking system going forward.
The idea that only 100 banks will fail in the next year is wishful thinking.
Douglas A. McIntyre is an editor at 247wallst.com.
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