WASHINGTON Though the banking industry remains in good health, the Federal Deposit Insurance Corp. said in a report Thursday that warning signs are present of a potential downturn.
In its fourth-quarter Regional Outlook, the FDIC said that the combination of rising energy prices, high levels of corporate and household debt, the tight labor market, and a weakening stock market have created a challenging environment for banks.
The report also said that banks nationwide are taking on more risk by relying on noncore funding and by increasing concentrations in traditionally high-risk loan categories, such as commercial real estate and construction and development.
It appears that insured institutions high levels of profitability have been achieved, in part, by an increased appetite for risk, said FDIC Chairman Donna Tanoue.
