Another Bank Failure Friday has come and gone — with no news

Sometimes it’s hard to report on the absence of something; news is biased toward action, not inaction.

But it’s worth noting that the FDIC has shut down only three banks nationwide in August and September combined. Click here for the full list of failed banks.

The pace of failures has been declining for a couple of years, and the unofficial problem bank list (the official one is not public) has declined to 886 from 984 a year ago.

I haven’t seen any really great analyses of these recent trends, so please post relevant links in the comments.

It seems pretty obvious, however, that the worst of the banking crisis is behind us. Unless the FDIC accelerates closures dramatically, the vast majority of the 886 troubled banks — including the 69 in Georgia — will survive.

With home prices apparently having bottomed out and with short sales increasingly replacing foreclosure sales, banks are steadily cleaning up their balance sheets. Zillow, which has a pretty good record to my mind, predicts that the July Case-Shiller home price indices will show year-over-year gains of over 1 percent.

9 comments

  1. saltycracker says:

    “It seems pretty obvious, however, that the worst of the banking crisis is behind us.”

    As long as the Feds hold interest rates 4% under water, loan it at near zero, print money and the world believes our currency is the least dirty laundry, the crisis is in remission.
    The banks are slowly cleaning up as they are allowed to find other covers for the losses from government help to investment banking, fees and leveraging up.

  2. IndyInjun says:

    Finance, Insurance and Real Estate grew to an unsustainable 40% of the economy. Legislated fraud is trying to prop it up at those levels. This will not work, as Salty alluded to. All of those banks are parasites on savers, who are being driven to extinction.

    • IndyInjun says:

      Wow, Harry, you read Zero Hedge, too? I confess to having misjudged you from my previous stent on PP.

      With respect to the topic, review of bank health ratings surprised in that the national banks actually look pretty good. That is, they look good until you look deep into Bank of America and find something like $63 billion in US Government guaranteed assets, something the local banks are no long into. I don’t know about you but, I exclude bankers from having any semblance of “producer ethic.”

      • Harry says:

        BOA is one of the 8 TBTF banks. From here on until the dollar collapse, the Treasury/Fed assures that these banks can continue to borrow at 1/2% from the Fed and loan out their 10:1 leveraged assets to yield 3.5% to 25%. No way they lose. Even if inflation goes hyper they will still make out.

          • Harry says:

            I meant in terms of traditional bank industry reserve and capital requirements, but who knows these days with the derivative exposure of TBTF banks? It’s becoming obvious that repeal of Glass–Steagall was a mistake because of the moral hazards and unintended consequences entailed with TBTF banks.

            • saltycracker says:

              Yes- the TBTF’s also claim little exposure in derivatives to Europe but a complex article charting their insuring exposure in one country through another argues they are highly exposed if the insuring bank can’t cough up either……Bottom line is we have no idea what the big investment/deposit banks are doing and history says they are so big, they don’t know either.

              The TBTF’s are making a run at a financial oligarchy by working hand in hand with their guarantor, a President trying to control the major industries. It’s working.

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