Dozens of U.S. banks will fail by 2010: analyst

[NNN0LHI]

http://www.reuters.com/article/reutersEdge/idUSN0143367820080201

NEW YORK (Reuters) - Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction, an analyst said.

The surge would follow a placid 3-1/2 year period in which just four banks collapsed, all in the last year, RBC Capital Markets analyst Gerard Cassidy said in a Friday interview.

Between 50 and 150 U.S. banks -- as many as one in 57 -- could fail by early 2010, mostly those with no more than a couple of billion dollars of assets, Cassidy said. That rate of failure would be the highest in at least 15 years, or since the winding down of the savings-and-loan debacle.

"The initial round of failures will come from smaller banks with limited access to capital and overexposure to commercial real estate," Cassidy said.

[Cleita]

1. R.I.P.

It will hurt but maybe it will bring back the regulation the banking industry sorely needs.

[marmar]

10. What Cleita said!

They've done it to themselves. Eventually, greed and exploitation of your customers will come back to you.
:nopity:

[sam sarrha]

2. Poppy got rid of bank competition from Savings-n-Loans, Dubya gets grid of little banks and PENSIONS

[Gman]

3. What is it about Bush administrations and bank collapses?

I guess when they do their looting, this is what happens.

[Captain Angry]

4. The only business construction outpacing churches, has been banks.

I don't believe for a second that half the new banks in the last 5 years are properly chartered.

The ability to rapidly resell loans for bundling into CDOs has created this glut.

[tularetom]

6. I dunno they seem to be buildin a lot of jails

Maybe they'll need them fer all the bankers.

[Captain Angry]

7. Jails don't get much publicity and aren't normally on every corner.

That could change, but for now they stay in the periphery.

Banks and churches however are everywhere.

[defendandprotect]

12. Bankers don't go to jail --- they get bailed out by taxpayers . . .AGAIN!!!

[NNN0LHI]

9. Payday advance clip joints have been popping up all over around here

They look busy all the time too.

Don

[Captain Angry]

11. That is true.

But the banks that back them are starting to pull back.

As I understand it, tax preps can't do the standard advance on the returns like they did last year.

So, these businesses may start to see some slowdowns.

[papau]

5. they will fail only because of accounting rules - under FDR the rules were temporarily changed

for both banks and insurance companies - folks said there were "fake assets" on the books - and there were.

But in the end few failed post the reform.

Right now there is no market in Collateralized debt - the lack of see through was in the past ignored via credit ratings. But the money flow has not disappeared - those bonds are worth a great deal - and banks are being forced to write them down below their real value (non-payment despite what you hear is not that big a problem). If the accountants and Fed back off - and I expect they will - and allow fair values to be used for those income streams, few banks will fail.

Indeed the small banks may be safer than big banks since few went into collateralized debt.

[NNN0LHI]

8. I think credit unions would be a safe bet right now

Think thats where I am going to put the bulk of mine.

Don

[defendandprotect]

13. Soon, one corporation will own eveything ---

and everyone who used be a corporation or have a business will be demanding another NEW DEAL to
protect them from predatory capitalists!!!

[defendandprotect]

14. Soon, one corporation will own eveything ---

and everyone who used be a corporation or have a business will be demanding another NEW DEAL to
protect them from predatory capitalists!!!