FDIC Expects “Troubled Bank” List To Grow
FOX Business Network’s Ray Hennessey wrote today that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, said new data on the FDIC‘s so called “troubled bank” list will show an increase over the current 76 banks on the list. However, she added “that is not a big number” and the increase should not be construed as meaning a new wave of bank failures.
While speaking at the Society of American Business Editors and Writers annual meeting in Baltimore, the FDIC chairman said housing woes (in particular, local construction loans) have caused problems for a larger number of small banks. Yet, she noted that at the present time smaller institutions are in better shape than their larger colleagues.
The FDIC stands to benefit from new regulations proposed by the Treasury Department. Hennessey wrote:
“Free markets and some baseline level of regulation are compatible,” Bair said. But the key is fewer, not more, regulators, she said. One of the problems with the current system is “regulatory arbitrage,” where banks chose what regulators - often weaker ones - they fell under. Limiting the number of regulators these banks are accountable to is the key.
“Regulatory arbitrage is a problem in this country,” she said. “Some homogenization needs to take place.”
And a little less greed, it seems.
Source:
“Bank Troubles Expected to Grow at Manageable Pace”
Ray Hennessey
FOX Business Network, April 29, 2008
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