Rocky Vega

Over 700 banks in the US are distressed according to the FDIC, the largest number since 1993. The latest additions to the “problem list” are largely resulting from commercial real estate loans gone sour. The FDIC anticipates bank difficulties continuing to worsen in 2010 before there’s any chance of the situation beginning to improve.

According to MarketWatch:

“Based on the result, roughly one in 11 of the approximately 8,000 U.S. banks are on this list, with regulators expecting a significant expansion in the number of failures throughout 2010, boosted in large part by increased losses on commercial real estate sustained by mid-sized and smaller banks. See more on analyst expectations for 2010 bank failures.

“‘This year, the losses are going to be heavily driven by commercial real estate, we’ve known for some time and we have been projecting that,’ FDIC Chairwoman Sheila Bair told reporters. ‘The pace is probably going to pick up this year and for the total year it will exceed where we were last year. Overall, the banking system is challenged but stable, but is performing its credit extension role.’

“Bair said it takes longer for losses on commercial real estate to work through the system because frequently borrowers may have cash reserves and can continue to make good on payments for a while, even as a downturn expands.”

The Deposit Insurance Fund that the FDIC uses to protect member banks maintained a negative balance again in the fourth quarter, this time with a $20.9 billion loss… an all-time record low for the fund. You can read more details about situation in MarketWatch coverage of how about 10 percent of all FDIC-insured banks are “troubled.”

Rocky Vega

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.

Recent Articles

Why Too Much Data Might Actually Protect Your Privacy

Sam Volkering

The world is awash with data. All these data will shape the future, helping people make smarter decisions and act faster. But to realize this vision, there has to be a way to crunch the data. And with such a huge amount of it, that could be a problem. Luckily, there's a unique solution on the horizon. Sam Volkering explains...


Laissez Faire
Why the Fed Has Declared War on Your Money

Peter Ferrara

The value of the US dollar has been steadily declining for nearly a century. Thanks to Nixon, Greenspan and a slew of other "leaders" the poor greenback is a sad shell of its former self. But there is a way to reverse this trend, and restore it to its former glory... if only those in power were willing to do it. Peter Ferrara explains...


How to Trade the Return of Social Media Stocks

Greg Guenthner

The word of the day is "growth." With GDP screaming higher in the second quarter it appears social media stocks have taken this as a sign and have started showing their own outsized growth. Today, Greg Guenthner shows you how to play this trend for huge gains as the second half of the year gets in full swing...


Maestro
6 Major Flaws in the Fed’s Economic Model

James Rickards

Use what analogy you will: a car, a clock, a chemistry experiment... the point remains that the Fed believes it can control the economy. Indeed the Fed will stop at nothing to realize the goals of its dual mandate" to maximize job growth and maintain price stability. But, as Jim Rickards expalins, that conceit always ends in disaster. Read on...


The Best Way to Play the Surge in Equity Crowdfunding

Matthew Milner

When it comes to life-changing tech investments, venture capital has been at the forefront of the investment landscape. But now, there’s a new kid on the block that’s threatening the “old way” of doing things: Equity Crowdfunding. What happens when these two fields meet? Matthew Milner explains...