WASHINGTON – The FDIC yesterday approved a $4 billion budget for 2010–$2.5 billion of it to resolve failing banks–and the number of failures to continue to rise.
The banking regulator, which has shuttered 134 banks so far this year, is looking to hire another 1,600 staffers, about 950 of which will help resolve the growing number of troubled institutions. "It will ensure that we are prepared to handle an even larger number of bank failures next year, if that becomes necessary, and to provide regulatory oversight for an even larger number of troubled institutions," FDIC Chairman Sheila Bair said in a statement.
The FDIC moves comes on the heels of a $23 million increase in NCUA funding to hire additional examiners that will help deal with growing problems among credit unions.
The vast increase in FDIC hiring will also help to dispose of almost $37 billion of assets held by the agency as a result of failed banks over the past few years.
In addition to expecting bank failures to increase, the FDIC said it expects the number of at-risk banks to rise in 2010.
"The number of 3-, 4- and 5-rated institutions has increased by more than 80% thus far during 2009 and is expected to continue to increase next year," an agency statement said, referring to the five-point scale regulators use to judge a bank's risk profile. Banks with a "one" rating are considered the safest.
The forecast could mean further increases to the FDIC's "problem list" of troubled banks, which stood at 552 at the end of the third quarter.
