Word: fdic
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...next week or so, the U.S. will reach a somber milestone: 100 banks down the drain in 2009. It will be the first time since 1992 that 100 banks have failed in a single year and only the 11th time it's happened since the Federal Deposit Insurance Corporation (FDIC) was formed back...
...worst is far from over. The FDIC says 416 banks are at risk of failure, up from 117 a year ago. Soured commercial real estate loans alone may generate a fresh $600 billion in losses by 2013. Veteran bank analyst Gerard Cassidy of RBC Capital Markets expects as many as 1,000 lenders to go bust in total...
Despite those numbers, the banking system is no longer at risk of collapse. Megabank JPMorgan Chase, for instance, announced on Oct. 14 it earned $3.6 billion in the third quarter. Most of the institutions in danger are small. But those failures are straining the FDIC, which underwrites the nation's saving and lending by insuring deposits. When a bank fails, the FDIC makes up the difference between what's left and what's owed depositors, up to $250,000 per person per bank. Two years ago, the FDIC had about $52 billion in its deposit-insurance fund. Today that fund...
...FDIC funds is raising questions about how well the agency has contained the costs of the credit crisis. Bank failures are not of the FDIC's making: the Federal Reserve failed to rein in mortgage-lending, while regulatory agencies like the Office of Thrift Supervision allowed banks to make loans without adequate capital. But the FDIC has the final say on when and how to close a bank, and some believe it has been waiting too long to act, adding to the cost of failures. Regulators labeled Chicago-based Corus Bank critically undercapitalized in March, but it took the FDIC...
...more times the FDIC asks banks for billions to save the financial system, the harder it is going to be to hide...