Failures and Losses Equal Less New Loans

Posted on Thursday, February 25, 2010

702 banks (holding $402.8 billion) were on the FDIC’s “problem list” and 45 failed as of Q4 2009, 27% more than Q3 2009 (552). Total failures for 2009? 140. Total so far for 2010? 20!

In Novemeber FDIC required many banks to prepay 3 years worth of deposit insurance premiums – almost $46 billion, as indicators of asset quality continue to deteriorate during the fourth quarter and banks charged off $53.0 billion in uncollectible loans during the Q4 2009 compared to $38.6 billion a year earlier. Defaults increased by $24.3 billion is Q4 to 5.37 percent and banks tightened lending to the sixth consecutive quarter by $128.8 billion in Q4.

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