FDIC's Problem Banks Swell, But Sector Improvement Seen
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The number of U.S. banks that are considered to be troubled jumped to the highest level since the height of the savings-and-loan crisis in the early 1990s, the government said on Tuesday.
The Federal Deposit Insurance Corporation's confidential list of banks that are in trouble has 702 banks listed with $402.8 billion in assets as of the end of 2009. This shows a 27 percent increase from the 552 banks with $345.9 billion in assets at the end of the third quarter last year.
"The growth in the number and assets of institutions on the problem list points to a likely rise in the number of failures," said FDIC chairman Sheila Bair at a news conference in Washington on Tuesday. "Both the problem list and bank failures tend to lag behind economic recovery."
The big banks in the U.S. have been supported and are subsequently improving on the back of aid from federal bailout funds, but small and mid-size banks are stressed and will likely remain that way in the coming years.
Financial regulators in the U.S. are closing banks at the most rapid pace seen since 1992, with 20 lenders being seized through the first seven weeks of 2010 after shutting down 140 in 2009 after the collapse of the home and commercial mortgage market. A total of 28 banks failed in 2007 and 2008 combined.
The FDIC said that banks basically broke even in the final quarter of 2009, earning a total of $914 million. In the same quarter of 2008 the financial market showed a loss of $37.4 billion. Nearly one in three banks reported a net loss from October to December.
"Consistent with a recovering economy, we saw signs of improvement in industry performance," Bair said. "It's not that this was a strong quarter. It's simply that everything was so bad a year ago."
For all of 2009, U.S. banks earned $12.5 billion, with a return on assets of 0.9 percent, up from the $4.5 billion and 0.3 percent in 2008 respectively.
The Federal Deposit Insurance Corporation's confidential list of banks that are in trouble has 702 banks listed with $402.8 billion in assets as of the end of 2009. This shows a 27 percent increase from the 552 banks with $345.9 billion in assets at the end of the third quarter last year.
"The growth in the number and assets of institutions on the problem list points to a likely rise in the number of failures," said FDIC chairman Sheila Bair at a news conference in Washington on Tuesday. "Both the problem list and bank failures tend to lag behind economic recovery."
The big banks in the U.S. have been supported and are subsequently improving on the back of aid from federal bailout funds, but small and mid-size banks are stressed and will likely remain that way in the coming years.
Financial regulators in the U.S. are closing banks at the most rapid pace seen since 1992, with 20 lenders being seized through the first seven weeks of 2010 after shutting down 140 in 2009 after the collapse of the home and commercial mortgage market. A total of 28 banks failed in 2007 and 2008 combined.
The FDIC said that banks basically broke even in the final quarter of 2009, earning a total of $914 million. In the same quarter of 2008 the financial market showed a loss of $37.4 billion. Nearly one in three banks reported a net loss from October to December.
"Consistent with a recovering economy, we saw signs of improvement in industry performance," Bair said. "It's not that this was a strong quarter. It's simply that everything was so bad a year ago."
For all of 2009, U.S. banks earned $12.5 billion, with a return on assets of 0.9 percent, up from the $4.5 billion and 0.3 percent in 2008 respectively.
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