Washington - The number of US banks threatened by collapse
jumped dramatically in the first quarter with a 21 per cent increase
in 'problem' lenders, a US government agency said Wednesday.
The Federal Deposit Insurance Corporation's head Sheila Bair said
the increase - reportedly the worst change in 15 years - showed 'the
banking industry still faces tremendous challenges.'
The FDIC put 305 banking institutions on its 'red list' of
endangered firms. During the first quarter, 21 FDIC-insured banks
failed, the largest number since the last quarter of 1992, the FDIC
said.
From January to late May, a total of 36 banks, many of them
regionial firms, have been closed down. In all of 2008, the total was
25. The US is in the midst of the worst recession since the 1930s,
triggered by the crisis in mortgage lending and foreclosures.
The FDIC, which guarantees bank deposits, said that the firms it
insures reported a net income of 7.6 billion dollars in the first
quarter, a decline of 11.7 billion, or 61 per cent, from the same
period in 2008.
'Banks are making good efforts to deal with the challenges they're
facing, but today's report says that we're not out of the woods yet,'
Bair said. 'As I see it, we're now in the cleanup phase for the
banking industry.'
Offering a bit of good news for the banking sector, the Bank of
America Corp said Wednesday it has raised nearly 26 billion
dollars since the US government's stress test earlier this month.
The amount puts the bank about 76 per cent on its way to meeting a
government mandate that it raise 33.9 billion dollars in private
capital to ensure its survival of another dip in the US economy.
In other developments, a panel of top economists forecast an end
to the country's deep recession by late 2009 with possible growth of
1.2 per cent in the year's second half. The National Association of
Business Economists (NABE), which surveyed 45 economists, said the US
economy had shown some signs of stabilizing but would still recover
more slowly than in past downturns.
USA
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