FDIC: 12% of Banks Identified as ‘Troubled’

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WASHINGTON – Although the fund has moved back into the black (CU Journal, Aug. 17), the FDIC is reporting the number of “problem banks” it insures is approaching a 20-year high.

In congressional testimony, the bank regulator said that as of March 31, 2011, 888 FDIC-insured institutions were identified as “problem” banks. That figure is 12% of all FDIC-insured institutions. For that reason, FDIC representatives told Congress, it has been resisting any easing of lending standards for banks, even though banks say such easing is necessary in order to restart lending. The House Financial Services Committee hearing was a field hearing held in Newnan, Ga., because Georgia has had a high number of bank failures.

The FDIC noted that despite the high number of problem banks, the actual number of bank failures is slowing, with the number of failures in 2011 expected to be half that of 2010.

 

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