June 20, 2009: Bank Problems Continue
June 20th, 2009
FDIC Regulators closed three more banks on June 19 which brings the total number of closed banks in 2009 to forty; the most since 1993 when fifty banks failed. The total cost to the FDIC Deposit Insurance Fund from the three most recent failures is $363 million. The total cost to the Insurance Fund for 2009 as a direct result of bank failures is $11.06 Billion.
If history is a guide, there could be MUCH more to come in terms of bank failures. According to the FDIC website, in each year from 1984 to 1992 there was at least 100 bank failures with the worst year in that period being 1989 when 534 banks failed.
With bank failures continuing, it is difficult to jump on board with “the worst is behind us” crowd. In a recent blog post, we referenced a quote from World Bank President Robert Zoellick when he called the stimulus-induced eupohia in global markets of the past few months a probable “sugar high”.
That would seem to imply intense buying (which we have seen) followed by a period of equally intense selling (yet to come?).
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