WASHINGTON — For the first time in almost two decades, the FDIC is posting red numbers. The FDIC reported that as of Sept. 30 it was running a negative balance of $8.2-billion, the result of the 124 bank failures so far in 2009.
The bank insurance fund was last in the red in the early 1990s as the result of the savings and loan crisis and resulting failures. The FDIC insures deposits at 8,100 banks.
In a report released by the FDIC, the agency said it had increased the number of institutions it identifies as "problem banks" to 552, up from 416 as of June 30. The glimmer of good news? The amount of bad loans, from credit cards to commercial loans, is growing at a slower pace.
"The credit adversity we have been discussing for some time remains with us, and we expect it will be a couple of more quarters before we see a meaningful improvement in that trend," said FDIC Chair Sheila Bair in a released statement. "I am optimistic that if we address these problems head on, we will see clear signs of improvement in bank earnings and lending in 2010.
The FDIC recently OK'd a plan in which its insured banks are to lend money to the fund by prepaying annual assessments that would otherwise have been due through 2012, which should add approximately $45 billion to the insurance fund.
