FDIC Losing Money as Many More Banks Face Collapse


The FDIC reported that its insurance fund shrank 20% in the second quarter. Jeffry Brown speaks with a reporter and analyst about troubled banks.


JEFFREY BROWN: Today, the FDIC, which guarantees bank deposits, said banks lost more than $3.5 billion in the second quarter. The agency also reported that its insurance fund shrank another 20 percent, down to $10.4 billion. That’s the fund’s lowest level since the savings and loan crisis in the early ’90s.

So far this year, 81 banks have failed. Another 416 are on the FDIC’S so-called “problem list.”

Here to parse some of those numbers are Karen Shaw Petrou, managing partner of Federal Financial Analytics, a consulting firm to the financial services industry, and Binyamin Appelbaum, banks and banking reporter for the Washington Post. Welcome back to both of you.Karen Petrou, the first thing this tells us, the banking sector is still struggling, right?

KAREN SHAW PETROU, managing partner, Federal Financial Analytics: That’s right.

JEFFREY BROWN: What’s the biggest problem for the banks right now?

KAREN SHAW PETROU: Bad loans, and lots of them. Bad loans they wrote in the lead-up to the crisis and loans that are going bad now because of unemployment and ongoing economic problems.


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