The Federal Deposit Insurance Corp. released its latest Quarterly Banking Profile last week, and the news was expectedly downbeat. Not only did earnings at U.S. insured banks come in at $1.7 billion for the third quarter – the second weakest showing since 1990—but even as “many large institutions are continuing rot post losses due to weaknesses in their portfolios, we’re now seeing losses spread to a growing number of smaller institutions,” FDIC chairman Sheila Bair said at the agency’s press conference.
This deterioration is reflected in the number of banks on the problem list, which grew to 171 with a assets of $115.6 billion as of September 30 from 117 institutions with assets of $78.3 billion back in June. The Deposit Insurance Fund held $34.6 billion at the end of September. So it’s hardly surprising that the FDIC is creating a “modified bidder qualification process to expand the pool of qualified bidders for the deposits and assets of failing depository institutions.” No bank charter? No problem—bring on your bid. The agency will also “consider abbreviated information submissions and applications,” along with “conditional approval for Deposit Insurance,” according to the plan.