In an April 2008 post titled “Which one’s are the bad banks, anyway?”, I noted that the secretive FDIC list included some 76 institutions. The list is currently at 171. While both of those numbers are less than the total number of bank failures during the Great Depression and the Savings and Loan Crisis, the amount of money in play makes the case as to why this situation is comparable if not worse.
Your takeaway should be that there are fewer institutions, holding more assets (and more concentrated risk).
Take note also that in 1986 there were 17,887 institutions, both Commercial Banks and Savings Institutions under FDIC-insurance. As of 2007, there are only 8534 institutions, a reduction of 52%, concentrating both funds and risk, especially by geography. Data on the number of Savings Banks is not available on the FDIC site (or if it is, I haven’t found it yet), but there were twice as many Commercial Banks in 1934 as there are currently.
Of the 48 banks taken over by the FDIC, 22 of them have occurred in 2008, with 12 of those occurring over the last 3-months. As others have said, the next shoe to drop, especially post-holiday season, will be Commercial Real Estate. Take careful note of the FDIC staff vacancies across the country. Banks holding Construction & Development as well as Commercial Real Estate may very well be next.
Tags: bank, C&D, commercial, CRE, derivatives, FDIC, great depression, insurance, loans, S&L Crisis, savings
