700+ Banks Are Bordering on Insolvency

Tuesday, February 23, 2010
Posted in category Economics, Financial Markets

And this is according to an FDIC report.

The names of the banks on the list are never made available to the general public by regulators out of fear that depositors at those institutions may prompt a so-called “run on the bank.”

…Bair confirmed that the pace of bank failures would pick up this year, which would likely put a further strain on the agency’s deposit insurance fund.

This fund, which covers customer deposits when a bank fails, slipped into red last fall for the first time since 1991. The fund’s deficit continued to balloon in the fourth quarter to nearly $21 billion – its largest deficit on record.

What is FDIC Chairman Sheila Bair’s spin?

“Usually a lack of profits is not considered a good result, but compared to the record loss the industry reported a year ago it represents a significant improvement,” she said during a press conference Tuesday.

Link courtesy of Steve Vance.

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2 Responses to 700+ Banks Are Bordering on Insolvency

  1. Jeff Hilton says:

    February 24th, 2010 at 8:27 pm

    Karen, It took me a while to figure out the reason for this story at this time. I believe its is a ploy to get depositors to fear small banks and in turn move their money to the big boys(who are really the closest to default). After all, this would accomplish the transfer of funds from the small bank to the mega, facilitated by the FDIC as always but less blatantly. The FDIC knows they couldn’t bail out the big boys and this move serves as a CYA for them in addition to kicking the can a little further down the road for the bankster elite.


  2. Karen De Coster says:

    February 24th, 2010 at 8:57 pm

    Jeff, I agree that the transfer of wealth to Wall Street’s quasi-government banks is definitely a motivating factor here – for closing the smaller banks in the first place. I have meant to blog further on that; you may have spurred me to get off my butt and do it.

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