FDIC: Jump In Number of Troubled Banks

117 Banks And Thrifts Are In Trouble, While Bank Profits Plunged 86% In Second Quarter

(AP)  The number of troubled U.S. banks leaped to the highest level in about five years and bank profits plunged by 86 percent in the second quarter, as slumps in the housing and credit markets continued.

Federal Deposit Insurance Corp. data released Tuesday show 117 banks and thrifts were considered to be in trouble in the second quarter, up from 90 in the prior quarter and the biggest tally since mid-2003.

The FDIC also said that federally-insured banks and savings institutions earned $5 billion in the April-June period, down from $36.8 billion a year earlier. The roughly 8,500 banks and thrifts also set aside a record $50.2 billion to cover losses from soured mortgages and other loans in the second quarter.

"Quite frankly, the results were pretty dismal," FDIC Chairman Sheila Bair said at a news conference, but they were not surprising given the housing slump, a worsening economy, and disruptions in financial and credit markets.

The majority of U.S. banks "will be able to weather" the economic and housing storms, with 98 percent of them still holding adequate capital by the regulators' standards, Bair said.

Total assets of troubled banks jumped from $26 billion to $78 billion in the second quarter, the FDIC said, with $32 billion of the increase coming from IndyMac Bank, which failed in July - the biggest regulated thrift to fail in the United States.

"More banks will come on the (troubled) list as credit problems worsen," Bair said. "Assets of problem institutions also will continue to rise."

Nine FDIC-insured banks have failed so far this year, compared with three in all of 2007. More banks are in danger of collapsing this year, Bair and other FDIC officials said, and they expect turbulence in the banking industry to continue well into next year.

IndyMac's failure and others in the quarter reduced the federal deposit insurance fund from $53 billion to $45 billion. Bair said the agency will raise insurance premiums paid by banks and thrifts to replenish its reserve fund and bolster depositors' confidence.

The $50.2 billion set aside to cover loan losses in the April-June period was four times the $11.4 billion the banking industry salted away a year earlier. Nearly a third of the industry's net operating revenue went into building up reserves against losses in the latest quarter, according to the FDIC.

Except for the fourth quarter of 2007, the earnings reported Tuesday were the lowest for the banking industry since the final quarter of 1991, the agency said.

Concern has been growing over the solvency of some banks amid the housing slump and the steep slide in the mortgage market. The pressures of tighter credit, tumbling home prices and rising foreclosures have been battering banks of all sizes nationwide.

The FDIC has been keeping an especially close eye on banks and thrifts with high levels of exposure to the riskiest borrowers and markets, agency officials say, including subprime mortgages and construction loans in overbuilt areas.

Another area of potential concern: banks' holdings of preferred stock of troubled mortgage giants Fannie Mae and Freddie Mac. A government rescue of the companies, whose share prices have rebounded a bit this week after plummeting recently as they struggle with billions of dollars in losses from bad mortgages, could be costly for scores of banks that hold billions in their preferred shares.

"We're closely monitoring that situation," Bair said.

The FDIC said troubled assets - loans that are 90 or more days past due - continued to rise in the second quarter, jumping by $26.7 billion, or 19.6 percent, over the first quarter. It was the first time since 1993 that the percentage of total loans that were troubled broke 2 percent, at 2.04 percent.

The agency doesn't disclose the names of institutions on its internal list of troubled banks. On average, 13 percent of banks that make the list fail.

Pasadena, Calif.-based IndyMac was taken over by the FDIC on July 11 with about $32 billion in assets and deposits of $19 billion. It was the second-largest financial institution to close in U.S. history, after Continental Illinois National Bank in 1984.

[rushliberal]

And WHO is surprised by this?

Remember under Reagan and Daddy Bush - Banks failed back then too - When will people LEARN that REPUBLICANS cannot run a country!

[u-r-right]

There''s too many banks anyway. It''s time for them to tighten their belts like the rest of us. I''m sick of seeing banks built with the finest marble and brass.

[jmurrieta1]

This reminds of the savings and loan failures that John McCain was such a big part of.

If you want to see your life savings evaporate, be sure to vote Republican. If you''re not already a billionaire, they could care less about your retirement.

[r9119111]

I just watched a hawk attack a dove. When I tried to scare the hawk away he clutched the dove with his strong talons and flew out of range to finish the job. I felt helpless and said a prayer, not of the hawk, but for the dove. He didn%u2019t have the equipment to fight off the predatory attack. He did the best he could to escape but failed.

I couldn%u2019t help relating it to the predatory climate in America in recent years. Republicans should hang their heads in shame for what they have done to America. Ordinary people have needed your help and you have turned your arrogant backs on them. All the while claiming to be people of high moral values. I am an independent voter who will never vote Republican again. You have shown me your true nature and I no longer support you or your values. No More!

so much for those ''fiscal'' conservatives!

[r9119111]

gop_forever at 09:18 AM : Aug 27, 2008:

Poor innocent banks -- my foot.

[stn_sage]

r9119111, but what about the poor innocent banks who loaned money to predatory people who had no intention of paying them back?

Posted by gop_forever at 09:18 AM : Aug 27, 2008
----------------------------------
SHAME ON YOU! SHAME ON YOU!
There''s no depths you are unwilling to plunge to in
order to lie and deceive! You''re awful!

Let me correct you as you''ve get things ''glass backwards''! You got the role of the banks and people backwards! It was the predatory BANKS who thought they could make an easy dollar, who stupidly allowed naive people to take on mortgages that they would fall behind in payments on! GET IT CORRECT!

[stn_sage]

We need to hold the bankers RESPONSIBLE for their actions! IF they make business decisions that any SANE person WOULD NOT have made, then they should be held liable for it!
They should get what the common citizen gets---
JAIL! JAIL! JAIL!. After a couple dozen got sent, the funny business WOULD STOP!
I say let''s try it and SEE! I bet I''m correct!

[stn_sage]

The FDIC should STOP bailing these banks out.
I mean stop it, NOW! And if local, state, and federal authorities WON''T do their jobs and take action against some of these wiseguy bankers, than the people CAN at the local level! But these cheating, lying, and fraud that is going on by these bankers MUST stop, NOW!

[wl7bzh]

There''''s too many banks anyway. It''''s time for them to tighten their belts like the rest of us. I''''m sick of seeing banks built with the finest marble and brass.

Posted by u-r-right at 08:03 AM : Aug 27, 2008
------------------------------

Kinda like the way televangelists build churches,Huh.

[missingamerica]

The horrible thing is that this will undoubtedly lead to further consolidation in the banking industry...

How long will it be, before two or three bank presidents decide who will be President of, and who will starve in, the United States of America?

[jtdev1]

I remember a few years back where the banks were getting double digit profit increases, now look we have to bail them out now. What happened to all that profit money?

This always happens. I guess it''s what you call Capitolism and free markets...

[xmanborg]

Let these banks Fail and close them. There are way to many Banks anyway and these Home Loans and Defaults are going to keep coming until 2010.

So Sit Down Tight and Hold on Right because the ECONOMY is going on Strike.

Bank Profits Plunged 86% In Second Quarter, I am Glad Bank of America Charges $34 for overdraft fee and that is criminal, thats why I closed my account with B of A because they are a bunch of Swindlers.

[donevis-2009]

Anyone notice how long checks are taking to clear now? Wrote a check to my son to deposit in his account. My account was charged the after a one day delay. His bank told him it will take a week to clear. Secondly I cashed out my 401k plan because of the beating it was getting. Almost 5 grand in six months. When I deposited the check I was told only 5 grand would be available in 5 business days and the remainder two days after that. Oh, and now this CBS news page has stopped showing the stock market graph that was showing up in the right hand column. Things are starting to get wierd. "God Speed USA"

[lochlan-2009]

"117 Banks And Thrifts Are In Trouble, While Bank Profits Plunged 86% In Second Quarter"


And the markets are going up today.

[docpeter-2009]

From the above article, "Quite frankly, the results were pretty dismal," FDIC Chairman Sheila Bair said at a news conference, but they were not surprising given the housing slump, a worsening economy, and disruptions in financial and credit markets.

______________

Evidently she needs to talk to Bush-McCain, she is not supporting the GOP.

[docpeter-2009]

Bank Profits Plunged 86% In Second Quarter, I am Glad Bank of America Charges $34 for overdraft fee and that is criminal, thats why I closed my account with B of A because they are a bunch of Swindlers.

Posted by XmanBorg at 10:24 AM : Aug 27, 2008
______________
He11 thats to be expected. My wife was charged $14 for paying her autoloan through JP Morgan Chase over the phone for a late first payment for a bill that was never received. I guess they decided that if they don''t send the bill then your first payment would be late and they can then charge a leate fee, thereby making more money on the front end of the payment.

Troulbe is my wife wanted to pay an extra $50 on the principle of the loan ratehr than a $14 late fee, but that option wasn''t available over the phone.

JP Morgan Chase has a "gotcha!", "Catch 22" there. But, alas, it isn''t a dead subject for either of us yet.

[brianbwb-2009]

What great timing, just after Bush signs the "welfare for crooked bankers" bill, a bunch of new banks jump into the welfare line.

Of course the cost will be much higher than the original plan.

Idiot-in-chief should have let them fail, and their senior management be sued for at least malfeasance.

[brianbwb-2009]

"FDIC is going to raid the treasury!" Posted by gop_forever

What treasury, do you mean the one now relocated to China?

All they will get are the crumbs left by the war profiteers, the fed is going to have to print more money to cover it''s own behind, and that means another drop in the dollar''s value.

Sure am glad I take payment in Euros.

[bobnjersey]

[The FDIC should STOP bailing these banks out.
I mean stop it, NOW! And if local, state, and federal authorities WON''''T do their jobs and take action against some of these wiseguy bankers, than the people CAN at the local level! ]
[Posted by stn_sage at 09:59 AM : Aug 27, 2008]

so then the bank will default ... close it''s doors because they''re not solvent ... which will create panic and runs on not only the insolvent bank ... but on all banks.

this is the reason for the fdic ... prevent widespread panic about the availability of a depositer''s money.

if there was malfeasance by the officers of the bank, prosecute them appropriately, seperate from securing the solvency of the institution.

[marshall_nee]

Whackovia the next shoe to fall?

[antoniof123]

The banks that fail we should nationalize the bank, fire the managers and take away their bonuses, then tell the share holders this is risk, then sell off the assets to pay the depositors off. I bet after you do it to a couple the rest will fall in line.

[Michael Arnold]

Black Fridays are here to stay. What bank(s) will sink this BF?

Watch out.

[deacon20081]

The only bank I will deal with is Wells Fargo. I recieve calls from banks weekly offering incentives to come to their banks. No Thanks is my response.
Make a deposit before 4:00 pm and it is in your account the following morning. $100.00 is available as soon as the deposit is made.
Checks clear almost immediately these days as the transactions are all electronic. Any bank that tells you there will be a week waiting period is using your money long before then.

[walt1944-2009]

The FDIC has announced that over 100 banks are in "trouble" with that number presumably growing as the year continues.

Unfortunately, the FDIC''s assessment does not agree with the pronouncement by John McBush "DRRRILLLL, SURRRRGE" McCain who contends that the economy is strong, banks are solid, jobs are plentiful, and we citizens of the USSA have never had it so good!!!???

McCain has, therefore, sat down at one of his 7 kitchen tables and wrote a memo to the creator of this insanity, the Great Emperor Bush II, to have him instruct the FDIC to get on the "same page" that McCain is on, and to stop spreading "doom and gloom" throughout the country and only spread "HAPPY" propoganda such as who the celebrities will be on the new season of "Dancing With the Stars!".

SIG HEIL, BUSH!!!!
sig heil, WE NEVER HAD IT SO GOOD, McCain!!!!!

[screan_name]

Once again Republicans deregulate and the tax payers get ripped off.

[donevis-2009]

With all the noise about Bank troubles, who''s propping up the Market?

[wardoglrs]

Why do you people blame the repubs?.
Try blamming the moron voter it just makes since.
You voted them in and just like the Dems blamming the rupubs and the repuds blamming the Dems I blame the voter. That''s why your hurting and its going to get alot worse very soon.

[iphyt4u]

The FDIC only has so much money. Consequently, they will have to go to the Treasury Department to bail out banks. Which means the tax payer picks up the tab. The present day republican administration under Bush, and the republican controlled Congress up until 2006, has to be held accountable for the situation that the country is in today. republican welfare means bailing out banks (bear stearns) and mortgage companies (fannie may and freddie mac), tax breaks for oil companies(Exxon, Chevron, etc.) IT"S OUT OF CONTROL. THE REPUBLICANS HAVE DESTROYED THIS COUNTRY!

[noloyalisti]

Do these fascist banks want more government welfare? I thought their right wing owners didn''t like welfare moms. I myself am sick of the double standard. We need a new government with Obama is charge to strongly regulate the fascists.

[donevis-2009]

Why do you people blame the repubs?.
Try blamming the moron voter it just makes since.
You voted them in and just like the Dems blamming the rupubs and the repuds blamming the Dems I blame the voter. That''''s why your hurting and its going to get alot worse very soon.

Posted by WarDogLRS at 05:51 PM : Aug 27, 2008

The crooked voting machines are the resposible party for this current administration being in the Whitehouse. With admitted glitches from Diebold within the last two days shows the vote count was mis-represented, to say the least. Some people actually believe the elections were rigged! However without proof it doesn''t matter. Its important to note that investigations on higher government levels have been stonewalled, postponed, or ignored so documented proof and conviction are none existant. Lower level courts in Ohio found Poll workers guilty this week for their negligence and failure to follow procedure.
So throw your attitude towards Diebold. Maybe a strongly worded letter from a "War Dog" like yourself will change things around.

[nskduke2]

iphyt4u
Both parties are to blame not one but both.

Bailing out a company is not in the best interest of the government or the people but when companies like Fannie May and Freddie Mac are in trouble and it threatens the economy, action must be taken.If no action was taken during the Fannie May and Freddie Mac issue our economy would have crumbled.

[u-r-right]

RIP Roy Plummer, ya crazy basterd!

[oneworldusa]

Money from the FDIC is not tax money so to speak. The FDIC charges fees to banks to protect funds up to $100k per account titling and $250k per retirement fund. We pay these fees through reduced interest returns on our savings accounts.

[latrocinor-2009]

Gosh, all those credit cards to pay off those credit cards to pay off those credit cards to pay off those credit cards to pay off those credit cards to pay off those credit cards....etc.

It had to end someday.

I suppose the ignorant people can blame the Republicans rather than take responsibility and grow up.

[rgmiron]

stn-sage "The FDIC should STOP bailing these banks out.
I mean stop it, NOW! And if local, state, and federal authorities WON''''T do their jobs and take action against some of these wiseguy bankers, than the people CAN at the local level! But these cheating, lying, and fraud that is going on by these bankers MUST stop, NOW! "
--------------
People are getting tired of these criminal bankers and their bailouts! We need change NOW !!!!!