U.S. banks suffer 149 percent rise in bad loans
msnbc.msn.com
New data on each of 8,000 banks show the breadth of recession's impact
By Bill Dedman Investigative reporter msnbc.com
updated 5:52 a.m. PT, Tues., March. 17, 2009
Foreclosures and bad loans raced through the banking industry in 2008, with the more than 8,000 U.S. banks registering a 149 percent increase in troubled assets, according to a new analysis of bank financial reports to the federal government.
While a large majority of banks were still healthy, 163 ended the year with more troubled loans than capital, up from only 13 a year earlier, according to the analysis of data from the Federal Deposit Insurance Corp. by msnbc.com and the Investigative Reporting Workshop at American University in Washington, D.C.
Nationwide, seven out of every 10 banks were less well prepared to withstand their potential loan losses than a year earlier. The analysis relies on information reported quarterly to the FDIC, calculating each bank's troubled asset ratio, which compares troubled loans against the bank's capital and loan loss reserves.
Although attention has focused on the largest banks, which hold the lion's share of deposits, the analysis shows how widespread the problems in the banking industry became in 2008 as the mortgage meltdown and broader recession unfolded. Msnbc.com is publishing information on the nation's 400 largest banks as well as all banks with high ratios of troubled loans at year’s end. And the American University group has created a new Web site, BankTracker, to provide information on the financial health of every bank in the country.
The American Bankers Association opposes the publishing of such figures for mainstream consumption. It said that no single figure can capture the complexity of the rapidly changing financial situation at an individual bank, and that the public may not be prepared to handle that information.
"Frankly, you could cause a run on a bank unnecessarily," said John Hall, ABA spokesman. "By widely publicizing this ratio, while the analyst community often uses it, when it's put in the general public's hands often they get confused and don't understand that this doesn't necessarily mean the bank can't come back to healthy status." |
