FDIC Says 552 Troubled Banks At End of Third Quarter
The troubled bank tally keeps getting worse. MarketWatch’s Ronald D. Orol wrote today:
The number of distressed banks in the U.S. rose to the highest level in sixteen years in the third quarter, and the insurance fund used to protect bank depositors swung to a negative balance, according to a report released by the Federal Deposit Insurance Corp. Tuesday.
The number of troubled banks rose to 552 at the end of September from 416 at the end of June and 305 at the end of March, the FDIC said in its third-quarter report. This is the largest number of banks on its “problem list” since the end of 1993.
“Today’s report shows that, while bank and thrift earnings have improved, the effects of the recession continue to be reflected in their financial performance,” said FDIC Chairwoman Sheila Bair. “Earnings remain weak.”
Not only did the FDIC have bad news regarding the number of distressed banks, but also the fund that was created to protect depositors. Orol added:
The FDIC’s Deposit Insurance Fund, which is used to protect depositors, swung to an $8.2 billion loss in the third quarter, the largest drop since the savings-and-loan crisis of the 1990s. As a result of the loss, the agency was forced to dip into its contigency fund, which has dropped to $30.7 billion from $38.9 billion.
The agency is also is collecting three years of assessments on banks in advance at the end of 2009, along with banks’ fourth quarter assessmenets, which should bring in roughly $45 billion of capital to help dismantle failed institutions.
Source:
“FDIC: Number of troubled banks rises to 552”
Ronald D. Orol
MarketWatch, November 24, 2009
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