As if the economy wasn't already fighting enough strong headwinds, the risk of capital shortfalls and outright failure of the nation's banks is rising.
The Federal Deposit Insurance Corp., the federal agency that backs bank deposits, last week reported the biggest jump in "problem institutions" it has seen since the savings and loan crisis of the late 1980s. While the extent of the problem is still low by historic standards, it identified 76 banks as in trouble - a 52% increase from a year ago.
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According to the article, there is an increased risk for bank failures in the United States due to the current state of the economy. The Federal Deposit Insurance Corporation (FDIC) cited that largest increase in "problem institutions" since the crisis of the 1980s; there has been a 52% increase in "problem institutions" from last year. Many people believe that these seventy-six are just a slight representation of the large number of bank that are on the verge of failing. Many regulators are expecting around two hundred banks to fail within the next few years. The FDIC reassured people that despite the large number of "problem institutions," not that many banks will actually fail if the same thing happens that did last year (fifty "problem institutions," only three failed). Despite this hope that not many banks will fail, the FDIC plans to hire twenty-five staffers so that they will be prepared if and when the bank failures occur. This article shows the current state of the economy in that many banks are on the verge of failure because they do not have adequate resources in order to survive; however, the leaders of organizations that influence the banks are remaining optimistic while still preparing for the worst.
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