Wednesday, November 2, 2011

Update: Latest Bank Failures Versus Previous Years

The latest numbers from the FDIC's Failed Bank List show that bank failures are decreasing.  The last time Blue Haven Capital discussed banks going into receivership was September 2009 at which time the number of banks failing had been doubling every six months for the previous 4 years. The first half of 2010 saw the first decrease in the number of failed banks since 2005, and we have seen a steady decline for each of the last three semi-annual periods. One might logically argue that there are fewer banks around to fail, but tightened lending standards and increased FDIC oversight also have much to do with the better numbers.

Here is an updated list of annual bank failures:
2000: 2
2001: 4
2002: 11
2003: 3
2004: 4
2005: 0
2006: 0
2007: 3
2008: 26
2009: 140
2010: 157

From January 2011 through June 30, 2011 there were 48 bank failures. 
Between July 1 and October 30, 2011 there have been 37 bank failures. 
We should see fewer than 100 bank failures for 2011, which would be a decrease of more than 33% versus 2010.

Again, we encourage those who are buying CDs from a brokerage firm to be suspect of premium CDs. If a bank fails, the FDIC will NOT refund the premium you paid for that CD and you could easily end up losing money. We would welcome your questions regarding this little known fact of the brokered CD market. 

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