Bank On More Failures

Newsweek ^ | August 29, 2009

[Steelfish]

Bank On More Failures

If the economy is rallying, why are hundreds of banks in danger of closing in the coming months?

By Nancy Cook | Newsweek Web Exclusive Aug 28, 2009

While big institutions such as Citi, Bank of America, and Morgan Stanley have grabbed headlines and billions in bailout money, 81 small banks have shuttered their doors so far this year.

Despite a rebound in the markets, hundreds of additional banks are expected to close in the coming months as consumers and small businesses default on loans and as local real-estate investments drop.

The Federal Deposit Insurance Corp.warned Thursday that small banks will not rebound from the recession as quickly as the rest of the economy.

The FDIC oversees the country's 8,195 small to midsize banks by insuring their deposits, along with those of larger banks, though the fund that covers the deposits has shrunk by 40 percent this year.

NEWSWEEK's Nancy Cook recently spoke with Lawrence J. White, professor at New York University's Stern School of Business, about the bank closures to come, why smaller banks are proving to be so vulnerable, and how their closures can dash hopes of economic recovery. Excerpts:

[Tempest]

This can’t be true. Ostupid has decreed that he has rescued the economy and his puppet media are echoing his line of garbage.

[goat granny]

81 banks is less than 2 per state..I wonder what the average is over the years of small bank failures...no one has given the answer to that...