Bank Health
Dozens, perhaps hundreds, of other banks remain open even though they are as weak as many that have been shuttered. Regulators are seizing banks slowly and selectively — partly to avoid inciting panic and partly because buyers for bad banks are hard to find.
Going slow buys time. An economic recovery could save some banks that would otherwise go under. But if the recovery is slow and smaller banks’ finances get even worse, it could wind up costing even more.
(delicate balance. they better hope the economy recovers fast)
This year’s 106 bank failures are the most in any year since 181 collapsed in 1992 at the end of the savings-and-loan crisis…
The FDIC won’t say how deep a hole its deposit insurance fund is in… (guess that might insight panic as well)
The list of banks in trouble is getting longer. At the end of June, the FDIC had flagged 416 as being at risk of failure, up from 305 at the end of March and 252 at the beginning of the year.
Yet the pace of actual bank failures appears to be slowing. The FDIC seized 24 banks in July, 11 in September and 11 in October. (we’re still falling down a well, but we’re not falling as fast)
The FDIC’s first priority, spokesman Andrew Gray said, is to maintain public confidence in the banking system. “As evidenced by the stability of insured deposits throughout last year, this mission has been a success,” he said
Notice how they don’t say that their first priority is transparency. Transparency might give people a real understanding of how safe their money is and allow them to make good decisions for themselves. Confidence, even if false, will abate any bank runs- this is their reasoning. Eeeek. I wouldn’t want the FDIC’s job right now.
