More Scary Bits from the FDIC
The American banking system is not improving, the FDIC reports.
This morning, the government agency added 111 more lenders to its “problem bank” list, which now stands at a 15-year high of 416 banks. That’s nearly $300 billion in combined assets at risk. As always, the FDIC will not name names, lest the list might actually become useful.
What’s more, as we forecast Monday, the FDIC’s deposit insurance fund took a major hit in the second quarter. Even after raising $5.6 billion in replenishments, the fund fell from $13 billion to $10.4 billion. We hasten to add this still doesn’t account for the roughly $7 billion in losses occurred by the Colonial and Guaranty failures.
In all, FDIC insured banks reported a $3.7 billion net loss in the second quarter, only the second quarterly loss reported in the last 18 years.
The FDIC can borrow up to $500 billion from the Treasury for future bank failures and deposit rescues… hard to believe that they won’t be tapping that backstop soon.