Finance

Banks Keep Failing

bank failures
Planet Money/FDIC data

For small banks around the country, the crisis isn't over.

Two more banks failed last week, bringing this year's total to 127 — on pace for this to be the worst year since the early 1990s.

The wave of failures, closely linked to the real estate boom and bust, is likely to continue for a while. The FDIC recently said there are 829 "problem banks" in the U.S., the most since 1993.

Both the failed banks and the "problem banks" are largely small, community institutions in areas hit hard by the bust, an S&P report noted last week.

This morning's WSJ looks a bit more broadly at what the failures mean. Here are a few key points:

  • For 94 percent of the banks that failed since 2008, residential or commercial real estate was the largest category of delinquent loans.
  • The bank industry has cut 188,000 jobs since 2007, a decline of 8.5 percent.
  • The biggest banks are getting bigger. Bank of America, JPMorgan Chase and Wells Fargo hold 33 percent of all U.S. deposits, up from 21% in 2006.
  • In the coming decade, the number of banks could fall to nearly 5,000, as a result of both failures and consolidation.

For more: Last year, Planet Money’s Chana Joffe-Walt told the story of what happens when the FDIC takes over a failed bank. Earlier this year, we revisited the bank, the FDIC guy, and the bank workers a year after the closing.

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