Tuesday, August 23, 2011
How nice, the banks are getting better
According to the latest top secret numbers, the number of banks that the FDIC considers at risk for failure has dropped. This is a good sign.
Twenty-three lenders came off the list of so-called problem banks during the second quarter, bringing the total to 865, according to data released Tuesday by the Federal Deposit Insurance Corporation. That is the first decrease since the third quarter of 2006 and is one of the clearest indicators that banking industry is returning to health. Indeed, there were 48 bank failures in the first half of 2011, far fewer than at the same point last year when the number of collapsed banks peaked at 157, the highest level since the last severe recession in the early 1990s. And the F.D.I.C. insurance fund that protects the nation’s depositors showed a surplus for the first time in two years.Of course one of the problem banks is the biggest US bank by deposits. Yes, I'm looking at you Bank of America.Despite these signs of improvement, the magnitude of problem banks — roughly one of every nine lenders — remains relatively high. And the number could rise again if the economy suffers another downturn — a prospect that seems increasingly likely amid all the grim data that has surfaced in the weeks since the list was compiled at the end of the June.
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