Banks Failing Faster

Inquiring minds are reading the Cincinnati Inquirer to see what is happening with America’s banking system. Banks are failing more quickly:

As of Friday, 108 banks have failed so far this year, compared to 69 through the same period in 2009. So far the crisis has been relatively easy on Ohio and Kentucky banks, claiming just three banks in Ohio and one in Kentucky. Analysts say the rate of failures so far this year points to 185 banks going under by the end of 2010.

And where, you might ask, are most of these occurring?

Analysts say lenders across the country are struggling through the recession – but the greatest numbers of the most distressed banks are clustered mainly in states reeling from the real estate collapse: Georgia, Florida, Illinois and California.

“It appears the most fertile markets to produce bank failures include Georgia, Florida, Illinois, Minnesota, California, Missouri, Michigan, Wisconsin, South Carolina and Texas,” wrote Steven Alexopoulos, an analyst with J.P. Morgan, in a July 26 report.

And why are they failing?

Months after Peoples’ failure, regulators issued a post mortem blaming the bank’s demise on a strategy that has doomed so many banks in the Sun Belt: aggressive growth and big bets on commercial real estate development.

Regulators seized Peoples Community Bank on July 31, 2009 – making it the first bank failure in the region in 17 years…The material loss review blamed the bank’s demise on its rapid growth, too many loans in commercial real estate and insufficient protection when the economy and the bank’s loans started to turn sour.

This should explain why all the bureaucrats are so into selling a real estate rebound. It’s the banking system stupid! Its very survival is attached to a real estate recovery.


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