Friday, July 23, 2010

HUNDRED AND ONE BANK NATION

We passed the 100 mark in failed banks in 2010.
Community Security Bank of New Prague, Minn., was the 101st in a string of small, regional banks to fail this year. While conditions have improved for many of the nation's largest banks, the lingering effects of the financial crisis continue to take a toll on local lenders across the country.

The FDIC expects the wave of bank failures that started in 2008 to peak sometime this year. Lending activity has picked up in some areas and many troubled firms have found new sources of capital.

FDIC spokesman Andrew Gray said the agency expects the number of failed banks to exceed last year's total of 140, though he added that failures this year will not approach the historic levels seen during the savings and loan crisis. In 1989, a record 534 banks were closed by regulators.

Still, banks have been failing at a rapid pace this year. At this time in 2009, regulators had closed a total of 57 banks.
Won't exceed that level this year, no.  Down the road, well.  Hey, considering we're expected to remain at 9% unemployment for at least another 2 years, who knows?  With a total collapse of commercial real estate for community banks that primarily lend to local small businesses under way and no relief in sight for years, I wouldn't count on that whole "bank failures peaking in 2010" thing that much.

It can get worse.  Much worse.  And so help me, I think it will.

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