Financial Times – US ‘problem’ bank list hits 15-year high:
The number of US banks at risk of failure is at a 15-year-high while the fund protecting depositors is at its lowest level since 1993, according to figures that highlight the spread of the crisis to the lower reaches of the financial system.
The Federal Deposit Insurance Corporation, a banking regulator, on Thursday said the number of “problem banks” had risen from 305 to 416 during the second quarter. The FDIC does not name the lenders on the “problem list” but said that total assets of that group had increased from $220bn to $299.8bn in the three months through June.
The agency said its fund had fallen to just $10.4bn from $13bn in the quarter, the lowest level since March 1993 when the US was in the middle of the savings and loans crisis. The fund has been depleted by bank failures: regulators have shut 81 banks this year.
That $10.4 billion number seems too high, but I think a commenter on this post at Zero Hedge nailed it:
More like Accounting 102 … from the report:
So they had $10.2 billion of income.
“Accrued assessment income from the regular and the special assessment increased the fund by $9.1 billion. Interest earned, combined with realized gains on securities and debt guarantee surcharges from the Temporary Liquidity Guarantee Program added $1.1 billion to the fund. Unrealized losses on available-for-sale securities combined with operating expenses reduced the fund by $1.3 billion.”
I think that’s right. In addition to regular fees there was a “special assessment” to restore the depleted funds that will be collected September 30. There is talk of other special assessments that may amount to 25% of bank profits for 2010. The FDIC wouldn’t need those special assessments if they hadn’t failed to collect insurance between 1996 and 2006.
Other FDIC and bank news:
- MSNBC – 1,000 Banks to Fail In Next Two Years: Bank CEO
- Of the world’s 30 safest banks, not one is in the U.S.
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