FDIC Report Finds Number of Troubled Banks is Growing
The AP reports that new data released by the Federal Deposit Insurance Corp. shows that there are 117 banks in trouble - the highest level in nearly five years.
Federal Deposit Insurance Corp. data released Tuesday show 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.
The FDIC also said that federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.
"Quite frankly, the results were pretty dismal," FDIC Chairman Sheila Bair said at a news conference, but they were not surprising given the housing slump, a worsening economy, and disruptions in financial and credit markets.
The majority of U.S. banks "will be able to weather" the economic and housing storms, with 98 percent of them still holding adequate capital by the regulators' standards, Bair said.
This weak report comes just a week after former IMF chief economist Kenneth Rogoff warned that a major U.S. banks would fail within months. Rogoff warned that, "We're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks."
Last Friday, Kansas-based Columbian Bank and Trust became the ninth bank failure this year. It sounds like we are not out of the woods yet. Here's a video about the bank failures and the new FDIC report.
