15-year high for problem list US banks

28 August 2009

A total of 416 US banks were on the Federal Deposit Insurance Corporation's (FDIC's) problem list during the second quarter of 2009, the regulatory body has revealed.

The figure, which is a 15-year high, is a sharp rise on the 111 that were included during the first three months of the year.

Shelia Bair, chairman of the FDIC, said that there has been a steady increase in the proportion of financial institutions that are troubled, but added that levels are "still well below" those seen during the previous financial crisis.

"As banks and thrifts continue cleaning up their balance sheets, more are coming on to our problem list," she explained, noting that there have been 81 failures so far this year.

The FDIC stated its deposit insurance fund was down to $10.4 billion during the three-month period - a fall of 20 per cent - but that it will not be asking for further funding from the Treasury.

Colonial BancGroup is one bank to have failed so far this year, with the financial institution filing for bankruptcy recently after its retail banking operations collapsed.

Written by Asim Shah

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