America’s Federal Deposit Insurance Corporation announced the failure of four banks on Friday, an event that went largely unrecorded in its national press. Bank failures, you see, have become common place. The closure of the First Vietnamese American Bank was the 143rd for the year.
That’s already a record high for the last decade. With 15% of the year still to go the failures of 2010 have already passed last year’s 140.
And this particular fall-out from the financial crisis is unlikely to have ended yet. The Calculated Risk website keeps an unofficial tally of “problem banks” compiled from information on the public record. Currently there are 894 institutions on the list with total assets of $416.5 billion.
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The calculated risk list is a very conservative one, and fails to list some of the very large banks that are still holding hundreds of billions in mortgage assets at 100 cents in the dollar, even though by all realistic measurements, they should be held at closer to 50 cents in the dollar (which would immediately make these banks insolvent).
Or perhaps Risk knows that if things start to look bad again, these banks will just threaten congress (again), and get another bailout at taxpayer expense.
So much for ‘competition’ as being some kind of panacea for anything. In the US, there were lots of banks with little meaningful regulation which has led the US (and most of the world) into a financial disaster.
Our own home brand of popular bank bashing is missing the point: more banks will simply mean more devious ways designed to push people into taking on more debt. Take a look at the housing market now and see where that’s got us.