Home > Democrats, Obama administration > Small banks still hurting, failures at 18 year high

Small banks still hurting, failures at 18 year high

Maybe bailing out the biggest banks wasn’t such a good idea:

The number of banks at risk of failing made up nearly 12 percent of all federally insured banks in the final three months of 2010, the highest level in 18 years.

The Federal Deposit Insurance Corp said Wednesday that the number of banks on its confidential “problem” list rose to 884 in the October-December quarter, up from 860 in the previous quarter. Those are banks rated by examiners as having very low capital cushions against risk.

Twenty-two banks have failed so far this year. And more banks are at risk, even as the FDIC reported the industry’s highest earnings as a group since the financial crisis hit three years ago.

Only a small fraction of the 7,657 federally insured banks — about 1.4 percent with assets of more than $10 billion — are driving the bulk of the earnings growth. They are the largest banks, including Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.

The big banks accounted for about $20.6 billion of the industry earnings of $21.7 billion in the fourth quarter. The total earnings compared with a net loss of $1.8 billion in the same quarter of 2009. The agency said bank earnings were buoyed in the latest quarter by reduced charges for soured loans.

Most of the big banks have recovered with help from federal bailout money and record-low borrowing rates.   On the other side, many smaller banks are struggling.

The Bush/Obama bailouts aren’t working out so well for the small community banks, the ones that really provide the lifeblood and working capital to small businesses.  I’m shocked that politicians in Washington didn’t see that coming.  Shocked, I say!

And what about that Democratic party tenet that says Democrats are always looking out for the little guy?  Last I checked, the Democrats had complete control of Washington until six weeks ago.

[Hat Tip: Instapundit]

 

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