FDIC Problem Banks List Grew to 117 Last Quarter
When the Federal Deposit Insurance Corp. (FDIC) released its second quarter Quarterly Bank Profile yesterday, it didn’t have a lot of good news to offer. In fact, the news is pretty bad if you are concerned about the financial soundness of your bank. In the report, the FDIC says during the second quarter, the number of “problem banks” increased from 90 at the end of the first quarter to 117 and the total assets at these problem banks grew from $26.3 billion to $78.3 billion. When looking at these numbers, you probably can get the feeling that more bigger banks may be in trouble because the number of problem banks increased by 27, but assets jumped $52 billion. While that’s true, $35 out of the $52 billion assets were from IndyMac Bank, which failed in early July (TheSteet.com).
Since the FDIC won’t tell the public which banks are in the list, we don’t know whether our bank is in trouble or not. This morning I heard on my local radio from a guy from The WSJ that apparently no big banks (I am assuming Washington Mutual and Wachovia are big names) are in the list. I can understand why small local banks can go under more easily. But does this mean big banks are safe? I don’t know. IndyMac is a pretty big bank and it still failed.
As the number of failed banks increased (BTW, The Columbian Bank and Trust Company became the 9th bank to fail this year. The Topeka, KS based bank was on August 22nd), the FDIC found itself get squeezed as well. In a Reuters story today, the Chairman of the FDIC said the agency “may need to tap into (short-term) lines of credit with the Treasury for working capital” so they can reimburse depositors immediately after the failure of a bank.
Talking about credit crunch, now even the FDIC needs to borrow money
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