27% Jump in “Problem Banks”
By Mark Noonan on Obama Depression
That good, old Obama “Recovery” just keeps chugging along:
<<< The number of “problem” U.S. banks jumped 27 percent during the fourth quarter of 2009 to 702, the highest level since 1993 and a sign the industry’s recovery is still shaky, regulators reported on Tuesday.
The Federal Deposit Insurance Corp said the industry overall eked out a profit of $914 million for the quarter, benefiting from a healing economy, but said the improvement was concentrated in the largest banks. >>>
The largest banks, of course, got the taxpayer money – and the printed money. Everything is great for the Banksters thanks to their men at Treasury and the Fed. For the mid- and small-sized banks, not so good. A lot of reasons for this, but one which will be crushing – indeed, already is becoming crushing – is noted by Mish:
<<< Over the next few years, a wave of commercial real estate loan failures could threaten America’s already-weakened financial system. The Congressional Oversight Panel is deeply concerned that commercial loan losses could jeopardize the stability of many banks, particularly the nation’s mid-size and smaller banks, and that as the damage spreads beyond individual banks that it will contribute to prolonged weakness throughout the economy.
One key take away is the huge numbers of banks at risk of failure…. There are 358 banks in the size of $1 to $10 billion with excessive CRE (Commercial Real Estate loan) concentrations. There are an additional 2,115 banks in the size of $100 million to $1 billion with excessive CRE concentrations. Only 1 of the top 20 banks (greater than $100 billion) has excessive CRE concentrations. However, because of size, that 1 is important as well.
Certainly not all of those banks will fail, but hundreds of them will. Moreover, of all the banks, a whopping 2,988 out of 8,108 have excessive CRE concentrations. With inadequate loan loss provisions… >>>
As I’ve said – the “recovery” is all smoke and mirrors. Its a bunch of money printed up out of nowhere or borrowed from the Chinese and shoved through the largest financial institutions, thus making it appear they have returned to profitability. It isn’t happening. The actual economy – the part which makes, mines and grows things – continues to contract. Unemployment continues to spread – both in numbers and duration.
How long can the Powers That Be keep the ball in the air? I don’t know – could even be another year or two. But next week, next month or next year, the crash is coming. There is no way to avoid it – policy can only make it a bit better, or worse, than its already set to be. The party is over – the time of printing fake money and borrowing against the future is finished. It doesn’t work. It never worked. It was an idiot idea put together by people who never understood that the real economy is made up of tens of millions individual actions which are collectively smarter than even 1,000 gathered Nobel Prize winners in Economics.
If we balance our budget right away and cut taxes on wealth creation, we can avoid the worst of what is coming. Or we can continue to try and borrow and print our way out of this – and have a 20 year long recession, which at times will look like the Great Depression. The choice is ours – and our best means of affecting the outcome is this November.
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