Bank Failure- Add Four More To the List
The list of bank failures grew this weekend to 29 Bank failures for the year of 2009. What is alarming is that we are only 4 months into the year and we have surpassed all of 2008 bank failures ( 25 Bank failures). How does this bode for the rest of the year? How does this connect to the stress tests on the largest 19 banks? How solvent or insolvent are these leading banks?
These last four bank failures took down $698.4 million of FDIC money. The bigger issue is that bank failures are depleting the money the FDIC has to work with. Congress needs to pass legislation in order that the FDIC can borrow more money from the Treasury Dept at least temporarily. What makes the issue of these bank failures even worse is one of the banks was the First Bank of Beverly Hills. The problems are two fold, first this was an affluent area that was effected and more so the FDIC couldn’t find another bank to acquire the deposits of First Bank of Beverly Hills. When this occurs it is more costly for the FDIC. These are not isolated incidents. We have surpassed last years bank failures by a little under 20% and have 8 months left in the year. During great depression times it is obvious many bank will fail. Bank failures are just part of the economic depression. The growing unemployment is adding as well to the feelings of uncertainty and fear. It seems almost like we are in the early stages of the great depression. What do you think?