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The following is from the Wall Street Journal's Real Time Economics
newsletter. In short, the banking problems are not over yet -- not by
a long shot.
"The Federal Deposit Insurance Corp. released its quarterly report on
the condition of the banking industry, and the data through Sept. 30
showed growing strains on a number of institutions. Here are some
quick takeaways:
1) The FDIC's deposit insurance fund fell to negative $8.2 billion at
the end of the third quarter, a decrease of $18.6 billion. This is in
part because of a $21.7 billion provision for future bank failures.
The negative balance will soon be boosted by a new FDIC program
bringing in $45 billion in prepaid fees from banks.
2) The number of “problem” banks, which are at a greater risk of
failure, rose to 552 in the third quarter, up from 416 at the end of
the second quarter [And that 136-bank increase is after the 50 actual
bank failures during the quarter].
3) The total assets of the problem banks rose to $345.9 billion, up
from $299.8 billion.
4) Based on the FDIC's data showing the number of problem banks and
the total assets of the problem banks, the average size of a problem
bank at the end of September was $627 million, down from $721 million
at the end of June (this could be in part due to the fact that several
regional banks failed in the third quarter).
5) Fifty banks failed in the third quarter, the most since the fourth
quarter of 1992, when 55 banks failed.
6) The quarterly decline in loan balances was the largest on record.
Total loan and lease balances fell by $210.4 billion in the third
quarter, the most since the FDIC began reporting the data in 1984.
7) Only three new banks were chartered in the third quarter, the
lowest level of new banks in one quarter since World War II.
8) Growth in operating revenues and an appreciation in securities
values helped offset higher loan loss provisions and push the banking
sector to a slight profit of $2.8 billion.
9) There were 8,099 FDIC insured banks at the end of September, down
from 8,195 at the end of June."
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