I thought it was time to check back in with the pace of bank failures. The FDIC began publishing a list of bank failures in October 2000:

The top 3 years with the most failures were:

* 2009 – 14 failures in first 1.5 months – thats 104 annualized.
* 2008 – 25 failures.
* 2002 – 14 failures immediately after the 2001 recession – 9/11.

The conventional wisdom that bank failures should be more of a concern than other types of firms in a weakening economy may not be entirely correct.

However, correlate the failure rate with banks’ rise of excessive exposure to mortgage lending and it makes sense.

After I did my chart, I came across a CNN/Money story expressing the same concerns.

About 150-300 banks are projected to fail during this recession. The last big surge of bank failures was in the late 1980s.


One Comment

  1. Edd Gillespie February 22, 2009 at 8:42 pm

    After glibly commenting that bank failures would be minimal, I thought it might be smart to set up a hedge fund betting against bank failures, but I can’t sell it. Anybody want it?
    Do you think the banks just got enough of what they were after; that their house of cards collapsed; that they really believe nobody is left out here to pay off loans; or what?

Comments are closed.