Bank Nightmare Lives On
By Stephen Rosenman
If at first you don’t succeed, fail, fail, and fail again. That was the motto for the banking industry in 2008, 2009 and 2010. Pressured by the economy’s near collapse, banks folded at an alarming rate. There were 25 bank failures in 2008, 140 in 2009, and 157 in 2010; a drastic change from the single digit failures normally seen. An alarming $634 billion in bank assets were seized during this three year period.
For over three years, the FDIC put teeter-tottering financials out of their misery, staking these so-called “zombie” banks, before turning over their assets and deposits to solvent firms. U.S. Bancorp (USB), BB&T Corporation (BBT), New York Community Bancorp (NYB), and Home BancShares (HOMB) grabbed some of these failed banks, for example.This year promised to be yet another sequel to the movie Night Of The Living Dead. In its December report, the FDIC announced that it had a list of 884 problem banks, 182 more than at the start of 2010, a list exceeding that of each of the preceding 17 years. The magnitude of the list potentially heralded a flood of bank failures.