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U.S. Banks Continue to Close at Record Pace!

  • Yes, green shoots are sprouting everywhere! Economy is recovering! The real estate market is reviving! Really? Not that I am aware of! I see yellow weeds everywhere. We are no where close to recovery or even the bottom of this ongoing economic crash! The Examiner reports :
    As many Americans began celebrating the 4th of July weekend, another rash of U.S. banks failed and were closed by authorities at the Federal Deposit Insurance Corporation. According to CNN, 52 banks have closed in 2009, more than double the number from last year.  Banks have been hit hard with dropping home values. The recession has increased unemployment, which has caused consumers to default on their loans.
    Six family-owned banks in Illinois and one bank in Texas closed Thursday costing the FDIC $343.3 million. The banks were acquired by the FDIC then sold to other institutions and will now reopen. The FDIC said the Illinois banks followed a business model that “created concentrated exposure in each institution.” The agency said that the six failures stemmed from the banks’ investments in collateralized debt obligations (CDOs) and other loan losses.
    Despite President Obama’s efforts to rein in banks, the carnage continues. This has included billions in aid to banks in return for preferred stock.  As I reported here in June ,10 banks began to repay $68 million in federal aid.  However, financial experts attending the Wall Street Journal Future of Finance Initiative meetings in Marchpredicted 1,500 U.S. bank branches would close by 2010. The Obama administration has tried to stimulate overall lending by backing assets like credit cards and mortgages.
    A new ABC NEWS report says new credit cards are down 38%. That’s discouraging for those who want to see banks pumping liquidity into the economy.  “The credit engine needs a tune-up,” says Jim Powers, an Equifax assistant vice president.  Equifax is a credit rating agency that provides financial data for consumers. 


July 9, 2009 - Posted by | Economics | , , ,

1 Comment

  1. Typical… People talking about recovery while the economy is actually in freefall. You know when the titanic struck the iceberg, the story was quite similar. Few wanted to believe it, and then suddenly it was too late!

    Great article, thanks for sharing.

    Comment by Mike | July 9, 2009

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