FDIC flashes SOS – 1,000 bank failures before recession is over – FDIC not too far away from tapping into U.S. Treasury $500 billion taxpayer lifeline. Georgia leads the pack with 40 bank failures since 2008.

By the end of the recession, there will be approximately 1,000 bank failures.  Does this sound extreme?  It should but the numbers don’t cover the entire story.  Since 2008 the number of bank failures has reached 269 and this doesn’t include consolidations done through the FDIC where bigger banks ate up smaller banks before they officially failed.  Last week, 7 banks failed.  At that pace, we are looking at 364 bank failures per year and the actual number of closings per week has consistently gone up.  The FDIC is in a precarious situation.  The Deposit Insurance Fund (DIF) is technically speaking, broke.  They have added additional cash reserves by front loading premiums on surviving banks but this can only stunt the financial bleeding for so long.  The problems in the banking system run deep and many of the smaller regional banks are failing because of commercial real estate loans going bad.

Here is the actual weekly trend of bank failures:

Source: FDIC

The trend is unmistakable.  The worse offending states are as follows:

Georgia:          40

Illinois:                        34

Florida:           34

California:       27

These four states make up 50 percent of all bank failures since the crisis started.  The current policy and momentum seems to be with banks ignoring balance sheet problems until they are no longer able to hide the dirt.  The too big to fail banks have already been chosen by the government and the rest will need to deal with the new economic landscape.  The FDIC, the seal of confidence and strength dates back to the Great Depression:

It is a game of confidence that we have increased the actual amount of deposit insurance to $250,000 from $100,000 at a time when the actual insurance fund is negative.  You would think that something this problematic will cause for a sense of urgency but the government is giving the FDIC until 2020 to get this fixed:

“WASHINGTON (MNI) – With the passage of the Dodd-Frank Act, the Federal Deposit Insurance Corp. will now have until the end of September 2020 to bring its reserve ratio to the statutory minimum of 1.35%, rather that 1.15%.

This is more than the eight years provided under the current Restoration Plan that would have given the FDIC only until the end of 2016 to bring its reserve ratio to 1.15%, an FDIC spokesman told Market News International Wednesday.

The latest projections presented at a Board meeting in June, indicated agency did not expect to meet that deadline.”

While the government gives the FDIC until 2020 to get their house in order, this is how the deposit insurance fund is looking:

This is the third consecutive quarter in the absolute red.  The banking system is starting to look like an imploding ponzi scheme and Wall Street is capitalizing on this vulnerability.  How?  If you were a big time investor would you invest in a too big to fail bank that may be performing poorly but has full government support or a smaller well run bank that has no support at all?  The incentive is not necessarily with the best performing and that is usually a staple of a well run capitalist system.  We are not operating in a capitalist system but a corporate oligarchy based on political connections between Wall Street and D.C.  This kind of system has been prevalent for decades now and crosses both political parties.

As the FDIC digs deeper into a hole, the number of problem institutions grows:

Keep in mind that the above list also fails to catch many of banks that do fail.  It isn’t exhaustive.  So even just looking at the above, we already have the 1,000 banks that will fail.  And the problem of course is how the current banking system is structured.  We have close to 8,000 FDIC insured banks but in reality, a very few control the bulk of the assets:

The top 4 banks of Bank of America, JP Morgan Chase, Wells Fargo, and Citibank make up 55 percent of all banking assets.  Then there is another tier of roughly 100 banks that eats up another 20 to 25 percent of assets.  So you have some 7,800 banks basically fighting for the remaining scraps.  The FDIC is in deep trouble going forward and this means we are in deep trouble.  The taxpayer is on the hook for the bill.  The U.S. Treasury already extended a lifeline of $500 billion to the FDIC “in case” they need the money.  Looking at the above data do you think they are going to use that lifeline?  It is only a matter of time.

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7 Comments on this post

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  1. Troy Billington said:

    All this is can only be characterized one way…PLANNED! “They” want to move to a one world currency, destabilizing the USD trickles down and destabilizes all other world currencies, then “They” can move in and propose a no-fail plan to use ONE currency which is the same value world-wide…great idea huh!?….well at least “They” think so!

    It’s not going to solve anything, because with a mere flick of the switch, “They” can bankrupt any country, state, nation or individual at anytime. No more slow impact like days of old, it happens in an instant!

    Meanwhile, the masses still believe this true(r) form of non-existent money means something, has value…which in any form it never has never will!

    I propose a currency of eternal value…people helping people, spreading their wealth, knowledge and will locally/globally to a common goal, to recognize truely that all people are equal and we must work together to build using our individual talents and contributions.

    NOTHING can ever destroy the value found in that methodology, all that results is progress and unitity of ourselves as a species.

    July 28th, 2010 at 9:01 pm
  2. Joe in JT said:

    I moved all my money out of Chase Bank and into a local credit union. Chase gobbled up my old bank. I don’t deal with mega banks anymore because they stole my taxpayer money. “Your fired” as Donald Trump would say. You better do the same thing, because one day the mega banks will pull the plug on your account and then your stuck.

    August 1st, 2010 at 4:33 pm
  3. rich said:

    The mere fact that the writer refers to the approaching WORLDWIDE fiscal collapse/re-structuring as a “recession” tells me all I need to know about trusting either his advice or his prognosis or his charts or whatever. Evidently he is ignorant of the much larger behind-the-scenes NWO manueverings and intents such as documented in the excellent educational video, The Secret of Oz.

    War, economic chaos, viral plagues, famine, and much much worse shall in due time make the word recession — or even depression — seem like paradise. When the real “powers” deem the mood of the desperate masses to be malleable enough, they shall roll out to the world its shiny new U.N. chains and people will get in line and beg to be first to receive them — anything to relieve the anarchy and death and misery, etc. These vile international bankster/murderers even now are laughing in derision at the fools (or paid shills) loudly pontificating/distracting from the real scenario, via continual yapping about how much “recession” we’ll endure before “coming out” of it . . as if it were a mere bump of some sort in the “economic cycle” or other BS!

    Let the buyer — not to mention, the PURVEYOR of such mendacious crap — beware! (People WILL afterward remember all these phony experts and pundits and shills and smoke-and-mirror sideshow puppets dancing and crooning and misleading the sheeple on behalf of their hidden masters.)

    rl

    August 1st, 2010 at 5:51 pm
  4. Jennifer said:

    It is time that communities band together to take over and own banks. Banks should never have been allowed to be taken over by larger banks located in distant cities. Our money is too important to be controlled by unseen players with hidden agendas.

    The entire financial system also should be reformed. It should be subordinate to the real economy, that is, the economy that produces real goods and services that benefit and sustain people and their families and their communities. All too often, when politicians talk about “the economy”, they are talking about the network of money flows and transactions. This is not the real economy!

    The United States is too big to have just one economy. If one part of this economy is depressed, the others get dragged down with it. Break up the US into a loose cooperative poliitical federation of several units, not necessarily based on the historical states, but based on a common history, geography or culture. All of these new units could change over time. All of these units could have its own economy and its own currency or currencies.

    August 1st, 2010 at 7:50 pm
  5. abdul said:

    Wilbur Ross predicted this about a year ago.

    August 1st, 2010 at 9:52 pm
  6. acudoc said:

    Google “Hugo Salinas Price Gold as the Generator of Jobs”
    for a brilliant essay explaining the real monetary reasons for our present economic predicament. Well worth the read, clear and easily understood.

    August 1st, 2010 at 10:46 pm
  7. norman lamont said:

    1 world? why?
    see “amero (N.american coin/currency) debunked as rumor.”
    see Ad. Smith: “empires , w/ EU flag, troops, etc. overseas,
    are expensive.”
    . . Bill Bonner sees conflict, M.Faber hyper. depression,
    etc.

    August 2nd, 2010 at 11:36 am

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