More US banks in trouble
(27 August 2008 – USA) A US regulator has reported that the number of troubled banks in the US rose by 30 percent to 117 in just the second quarter of this year.
The Federal Deposit Insurance Corp (FDIC) said that the level recorded is the highest level in five years.
FDIC also said that the combined assets of the 117 banks were US$78 billion, up from US$26 billion in assets at 90 banks in the first quarter. Bair has said that historically 13 percent of banks on the watchlist fail.
FDIC warned that conditions will worsen as the housing slump and credit crisis continues to hit profitability.
FDIC chairman, Sheila Bair, said that she expected more banks to join the agency's watchlist of problem banks. The watchlist tallies institutions with financial, operational or managerial weaknesses that threaten their financial viability.
Nine US banks have failed so far this year, including mortgage lender IndyMac which has drained the FDIC's Deposit Insurance Fund used to repay insured deposits at failed banks.
In a bid to replenish the US$45.2 billion fund, Bair said the FDIC will consider a plan in October to raise the premium rates banks pay into the fund.
The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other US banks, Bair said, to encourage safer business practices.
FDIC also said that the combined assets of the 117 banks were US$78 billion, up from US$26 billion in assets at 90 banks in the first quarter. Bair has said that historically 13 percent of banks on the watchlist fail.
FDIC warned that conditions will worsen as the housing slump and credit crisis continues to hit profitability.
FDIC chairman, Sheila Bair, said that she expected more banks to join the agency's watchlist of problem banks. The watchlist tallies institutions with financial, operational or managerial weaknesses that threaten their financial viability.
Nine US banks have failed so far this year, including mortgage lender IndyMac which has drained the FDIC's Deposit Insurance Fund used to repay insured deposits at failed banks.
In a bid to replenish the US$45.2 billion fund, Bair said the FDIC will consider a plan in October to raise the premium rates banks pay into the fund.
The agency also plans to charge banks that engage in risky lending practices significantly higher premiums than other US banks, Bair said, to encourage safer business practices.
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