Saturday, December 27, 2008

The Fed's been busy: Net-Failed Bank List is 20!

The Fed continues to beef up the size of the commercial banking system. The most recent additions are:
By my calculations, that brings the Net-Bank Failure list to 20 rather than the FDIC's-reported 25.

Calc: The FDIC reports 25 failed banks since Dec. 2007 (the start of the recession) PLUS the Fed's approval of 5 financial firms to the U.S. Banking system:

Equals 20 Net-Failed Banks!

The number of failed banks is growing rather slowly, don't you think? There is relatively little consolidation going on here amid the shrinking financial system (global bank losses total $1 trillion and counting).

Rebecca Wilder

3 comments:

  1. The Fed and the FDIC will not allow the largest banks and their branches to fail in terms of the banks' depositors, but the stockholoders' equity may be reduced or eliminated.

    Banks "safety nets" performed for many years beyond their legal obligations in protecting the public's savings and deposits.

    The insuring institutions chose mergers rather than liquidation of failing institutions, even though this alternative was generally more expensive.

    As a conseqence, depositors received total protection, not a limited legal protection.

    Because of recent bank failures hasn't the FDIC has increased their annual insurance levy?

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  3. The FED's solution to our financial institution's liquidity and solvency issues has been to convert our financial intermediaries into commercial banks.

    The large number of commercial banks in the U.S. banking system makes monetary policy that much more difficult to monitor and control.

    One of the fallouts will exacerbate the problem in which the money supply is now, and probably endlessly, unknown and unknowable.

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