Analysts say more U.S. banks will fail

Louise Story
IHT
Monday, July 14, 2008

As home prices continue to decline and loan defaults mount, U.S. regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?

The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.

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But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”

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2 Responses to “Analysts say more U.S. banks will fail”

1. Matt Says:
   July 14th, 2008 at 12:13 pm

   In the 1980’s and 90’s the Fed bailed out a total of $125 Billion and the banks were in worse shape then today? The fed over the last 6 months has bailed out about $460 billion and that does not count Freddie or Fannie + the other “dozen’s” of banks poised to collapse. Is there a typo here because it seems to me $460Bil and counting is much more than $125Bil, even after adjusted for inflation.

2. SubliminullMK Says:
   July 14th, 2008 at 1:19 pm

   Banks are failing, and banks own the USA. Federal Reserve, anyone? They are NOT the government! They are the private bankers in the Golden city of financiers — London City. Rothschild, Rockefeller, etc. THEY own the USA.

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