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103 U.S. Banks Have Collapsed So Far In 2010 – Do You Know If Your Bank Will Survive?

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Have you ever noticed how almost all U.S. bank closings are now announced over the weekend?  It is almost as if someone wants to keep the increasing number of bank closures out of the news cycle as much as possible.  The Obama administration continues to use phrases like “green shoots” and “economic recovery”, but the truth is that the U.S. banking system is in the middle of a meltdown.  On Friday, federal regulators shut down 7 more banks.  That means that the total number of U.S. bank failures has reached 103 for 2010 so far.  Last year (which was a really bad year for bank closings), we did not break 100 until October.  Of course federal officials promise that “the worst is almost over”, but can we really trust anything that they tell us at this point?

When it comes to the health of the U.S. banking system, the statistical trends certainly do not look promising. 

At the end of 2008, there were 252 U.S. banks on the FDIC’s problem list.

At the end of 2009, there were 702 U.S. banks on the FDIC’s problem list.

About halfway through 2010, FDIC Chairman Sheila Bair said that 775 banks (approximately 10% of all U.S. banks) were on the problem list.

Does anyone else notice a trend developing?

It is time for everyone in the financial world to admit that the U.S. banking system is dying.

Do you know if your bank if on the problem list?

You might want to go check.

Not that your money is going to suddenly disappear.

Even if your local bank fails, the FDIC will guarantee your bank account, right?

Yes, it will.

But the FDIC is far from healthy at this point.

The FDIC is backing approximately 8,000 U.S. banks that have a total of about $13 trillion in assets with a deposit insurance fund that is pretty close to empty.

Well, actually “empty” is not quite the right word.

It was recently reported that the FDIC’s deposit insurance fund is sitting at negative 20.7 billion dollars.

And the FDIC estimates that the seven bank failures on Friday will reduce the fund by another $431 million.

Ouch.

The truth is that the FDIC is rapidly turning into a gigantic financial black hole.

The red ink just seems to be endless.

The FDIC now estimates that their funds will experience a $60 billion reduction due to additional bank closings between now and 2014.

And to be honest, that figure is way too optimistic.

So who is going to bail the FDIC out?

The same source that bails everyone out.

The U.S. taxpayers.

But isn’t that bad?

Yes, all of these bailouts are going to cause the U.S. national debt to continue to explode, but what else can we do?

Are we just going to shut down the FDIC?

That wouldn’t go over too well with anyone.

No, the truth is that this is the system that we have built.

All the crap flows downhill and ultimately ends up in the laps of U.S. taxpayers.

The bad news is that it looks like large numbers of banks are going to continue to fail.

You see, right now the American people are simply not doing a very good job of paying their bills.

During the first quarter of 2010, the total number of loans at U.S. banks that were at least three months past due increased for the 16th consecutive quarter.

Just think about that for a moment.

Would you consider 16 in a row to be a trend?

In an economic system built on credit, it is absolutely imperative that most people pay their debts or the whole thing will come crashing down very quickly.

And right now it is undeniable that things are unraveling at a staggering pace.

So who is benefiting from all this?

Well, there is one segment of the banking industry that is actually performing quite nicely in the midst of all of this chaos.

Many of the largest banks in the U.S. have been reporting very large profits as they gobble up larger and larger shares of the U.S. banking market.

In a previous article entitled “Are We About To Witness The Greatest Banking Consolidation In U.S. History?”, we noted the rapidly growing power of America’s megabanks….

Back in 2000, the “Big Four” U.S. banks – Citigroup, JPMorgan Chase, Bank of America and Wells Fargo – held approximately 22 percent of all deposits in FDIC-insured institutions.  As of June 30th of last year that figure was up to 39 percent.

The Founding Fathers of this country warned us of the danger of big banks getting too much power, but we have not listened to their warnings.

Now we have monolithic global banks that are so immense in size that we seem almost powerless to control them.

In fact, the six biggest banks in the United States (Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo) now possess assets equivalent to 60 percent of America’s gross national product.

The truth is that these sharks aren’t shedding any tears when your local banks die off.

Why?

Because they know that many of the customers from the banks that have died will soon come their way.

The reality is that all of the legislation and regulations implemented during the past 30 or 40 years have rigged the game massively in favor of the big global banks.

So dozens upon dozens of smaller banks are going to continue to die and the megabanks are going to continue to eat up increasingly larger portions of market share.

So if you still have money in a small local bank, enjoy it while you can.

From now on, the small bank in America is an endangered species.

  • de Malfosse

    “Have you noticed…” – YES.

    Some months ago FOX News on a Friday – Neil Cavuto – broadcast begins at 16:00 EST – mentioned “no banks” had been closed that particular week. Minutes after he left the air at 17:00 EST the announcement that three (3) banks were seized by the Feds came across the newswire.

    Been like that ever since.

  • http://gardenserf.wordpress.com GardenSERF

    Even before small banks were failing they were gobbled up by larger banks and mergers.

    What you are seeing now is part of the continued consolidation of power (via the tool of finance) into a smaller group of invisible hands.

  • Elocutionist

    Banks started to be closed, exclusively on Fridays, in 2008. Federal regulators said they didn’t want to incite bank runs among depositors and felt better able to control things with closures taking place going into weekends, rather than on weekdays. In short, Friday closings are intentional. Moreover, it’s worth mentioning that bank accounting is completely averse to accounting principles employed throughout society at large. The FDIC is backing about 8,000 banks with some $13 trillion in assets. So, what is a bank asset? If someone owes you money, you’re inclined to think of that as a liability; your liability. But not banks. Their assets are made up of the loans they make. As a result, that $13 trillion in “assets” are actually monies owed them by borrowers – perhaps most of which cannot be paid back, given the data which cited sixteen consecutive quarters of growth in borrowers’ three-month delinquencies. No wonder bank failures stand at 103 thus far in 2010, compared to 57 at the same time a year. No wonder the FDIC has gone begging, hat-in-hand, for more funding from the Treasury – or anyone else who’d listen. No wonder markets are unstable. But there is one thing that is an incredible mystery. The Federal Reserve is in charge of bank regulation. In the unreforming financial reform bill, the Fed was given greater control over the regulation of banks and other financial institutions. These guys couldn’t do it right the first time. How can they be expected to do anything right now?? The banks will implode of their own weight. But now, with the Fed in charge of still more of the regulatory process, they’ll probably go down that much harder and that much sooner.

  • Sketch

    Don’t forget the 10 or so credit union failures… There were 15 in all of 2009.

  • Pangea

    Please write an article about how U.S. currency has become digital paper. Meaning, that if everyone tomorrow went to their banks, and demanded phyical cash, that the banks would not be able to supply them. Because the banks only have small amounts of cash in house. The so-called “cash” is now digital money tranfered via computers. I don’t think many people understand that. Thanks!

  • Goodyear

    To Elocutionist – I agree with you over all, except how is treating a long term note receivable or a short term note receivable a liablity? Isn’t that essentially what banks have, note receivables? It is an asset because they owe you money with interest and have assets which collateralize the notes. Now if you don’t think that money is collectable, i.e. allowance for doubtful accounts (A/R) then yes, that is a liability and should be written off, however these notes have hard assets (for the most part) backing them, i.e. homes, cars, businesses etc. So, although I agree with your points I think it is mis leading to say that bank accounting is completely reversed? I think it is more a product of being forced to lend 100,000 to people with 400 credit scores, and an asset worth 25,000. In addition, individual consumers who were not intelligent enough to understand that a loan 4 times your annual income is never smart.

  • Joe in JT

    I used to belong to Washington Mutual until they were gobbled up by Chase. I promptly removed my cash from Chase bank and deposited it into a small Credit Union. I don’t play ball with cheating mega banks. If they take over my credit union in town, I will dump the banking system all together and pay everything in person…cash.

  • lostinmissouri

    Do I know if my bank will survive?
    One will, because I am my own bank, and deposit only gold and silver coin.
    The bank, I owe money too, and have small paper dollar account with; I should be that lucky!
    Screw the banks. Bankers are first cousins to Lawyers…imho
    (not that there is anything wrong with that)

  • Guatíbiri

    They are the same since the money was invented.
    “Money Masters” Google it.

  • Elocutionist

    @ Goodyear: Banks treat outstanding loans, on their balance sheets, as assets. In a stable or growing economy, that probably makes sense. It would make infinitely more sense if this country didn’t operate on a fractional reserve system, but that’s a whole different story. My point is simply that, if someone owes you money, you’re inclined to look at that as your liability; you’re not counting it as an asset and you’re certainly not ‘banking’ on it as future revenue, particularly in the current fiscal environment. Banks are, however, and that’s a very dangerous policy. In the small town in which I live, I know of one regional bank (which I know to be in trouble on the FDIC list) which loaned totally unsecured money to a businessman for the purchase of another business. It wasn’t big money – about $45,000 – but even a small loan – that appears as yet another asset on the bank’s books – helps bolster its financial profile. That may have been an extraordinary situation but it illustrates my point. It should be pointed out as well that as banks withhold new financing from individuals and businesses, even those with acceptable credit scores, they have taken a particular liking to the purchase of government securities. About a week ago, banks replaced cash reserves with more than $47 billion in Treasuries and the like; their second-highest rate of government paper purchases in the past three years. I guess they think that will help their balance sheets, too.

  • Elise

    This is an interesting article from a prominent Chief Economist who talks about how depression is now hitting us. The chances of a second recession have now gone up from 45% a few months ago to 67% as of now (and it was at 0% at the beginning of the year). It mentions many issues like the banks failing at a faster and faster pace.

    A really good read for those interested in the state of things.

    http://pdf.cyberpresse.ca/lapresse/dufour/DRDepression.pdf

  • Stalker

    If the banks ever stop making unsecured loans to businesses it will be the end of the US economy. The problem we face is not that the banks are making dubious loans to small businesses, it is that they are financing huge projects with millions with no credible plan to be paid back. For far too long a good credit rating was all you needed to get a multimillion dollar loan to build a high rise. We need to get back to banks making loans based on a sound business plan and a credible market for goods.

  • Joe in JT

    If banks did replaced cash reserves with Treasuries and then our credit rating was reduced to junk status, can you imagine that crap hitting the fan!
    Talk about doomsday, yikes.

  • http://Theeconomiccollapse Dang

    Banks dont loan anymore, they dont pay interest to the american people. All there good for is just cashing your paycheck. Banks now days make loans mostly to buy treasuries. American debt that nobody else would buy.

  • Elocutionist

    What we really need is an end to fractional reserve banking. While the near-term pain would be excrutiating, it would be the long-term medicine that would cure the ills associated with a non-producing, debt-based economy.

  • Pecos Bill

    And that’s why I’m glad my money and soon even my mortgage are all in a Credit Union.

  • http://www.dgswilson.com/wpsite/ Doug Wilson

    I wanted to add this link to the discussion. For some time I’ve been saying, to everyone I can, if we want to stop the plan we have to stop participating in it. The plan is using our labor, in the form of federal reserve currency (what we now call money). So, we have to extract that money from their system.

    This can be accomplished by boycotting the banks owned by this group of international financiers. I’ve made a “Boycott The Banks” web page and blog page. I’ve created a form so people could join up and be seen taking action. What I need is someone who is more experienced with php and databases than I am.

    The page is here ( http://www.dgswilson.com/wpsite/join-the-boycott/ ). You can go there and comment, add ideas and give the link to your php coder friends. As soon as I can get it so peoples info is secure I can go ahead and open it up to the public.

  • rickyd01

    What happened to the law that governed monopolies? This is so corrupt it is actually sad that our politicians and business leaders have become low life greedy scum. Harvard needs to restructure their school and teach honesty, humility instead of greed and self-ism.

  • http://www.internationalrealestatelistings.com/Country/Mexico Taylor White, PHD

    You guys should take your cash – and yourselves – out of the States and move someplace else…Panama anyone?

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