UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

August 28, 2009

FDIC SEES BANKS AT RISK UP 36%

Washington Post - The federal agency that repays depositors at failed banks said that cleanup costs reduced its insurance fund to $10.4 billion at the end of June, the lowest level since the early 1990s, and that many surviving banks face mounting problems. The decline in the Federal Deposit Insurance Corp. fund increases pressure on those banks because they pay fees to cover the cost of failures, but it does not threaten the safety of accounts in failed banks. The government ultimately guarantees it will protect depositors. The FDIC said banks lost a total of $3.7 billion in the second quarter as growing numbers of borrowers failed to repay existing loans. In response, the industry continued to reduce the volume of its new lending, a major impediment to renewed economic growth. . . The FDIC said Thursday that it counted 416 banks at risk of failing as of the end of June, a 36 percent increase from the first quarter.

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