Bad Banks
With bankruptcy filings up nearly 30%, it is no wonder than the number of banks troubled by the bad credit loan crisis has also rose 30%. If you cannot repay a high interest bad credit loan, consider debt counseling.
Bad Credit Crisis Troubles Banks
According to the Federal Deposit Insurance Corp., in the second quarter the credit crisis took a toll on banks, raising the number of troubled banks to 117, a 30% increase which is the highest in five years, from 90 in the first quarter.
The FDIC's list of troubled banks comes as the industry struggles with bad consumer loans and weakened profits. About one in eight banks which hits the FDIC list eventually fails. Also according to the FDIC, bank profits fell 87% as compared with last year's quarter.
Sheila Bair, chairman of the FDIC, said; "By any yardstick, it was another rough quarter for bank earnings." She also added that most banks remain "fundamentally sound."
Troubled banks account for only about 1.4% out of 8,451 insured institutions. The increase in troubled banks is worrisome to analysts, because additional failures could worsen the economic downturn. Nine banks have failed so far this year, compared to only three for last year.
Bad to worse... Institutional Risk Analytics estimates that 110 banks; accounting for nearly 6% of the industry's assets, will fail by July of next year.
The FDIC states most troubled banks will recover, by shoring up finances through boosting capital, their earnings or the quality of their loans.
Nonetheless, the bank failures are consuming the FDIC's Deposit Insurance Fund, which reimburses depositors. In the second quarter, its balance dropped 14% to $45.2 billion. To boost fund assets, the FDIC said it's considering raising banks' premiums for deposit insurance, with troubled banks paying more because of their high risk of failure.
Michael Heller, president of Veribanc, a bank rating and research firm, says higher premiums are "appropriate." Still, he says, "this is the worst time to do it," because it could exacerbate banks' financial woes.
If you cannot repay a high interest bad credit loan, consider debt counseling.
 Share this Financial Article with a Friend - click here
Webmasters: Free Financial Content for Your Website!
Multiple ways to use our financial content:
1) You can use our RSS Feeds for automatic insertion and updates
2) You can simply link to this article
3) You can copy/paste the HTML code below (do not remove any links).
|
Personal loan and credit card resource serving millions of good and bad credit U.S. consumers.