81 Bank Failures So Far in 2009: But It's All Relative

So far this year, there have been 81 bank failures out of 8,195 FDIC-insured institutions, or slightly fewer than 1% of all banks. How does that compare to previous periods of financial stress and episodes of bank failures?

This first graph below shows annual bank failures (data here) from 1930 to 2009, showing the two most serious banking crises, the Great Depression (9,146 bank failures) and the S&L Crisis (2,935 bank failures).

This chart shows bank failures from 1935 to 2009, and puts the 81 bank failures this year in perspective in comparison to the S&L crisis and the second half of the Great Depression.

This chart below shows bank failures since 1970, and puts some further perspective on the 81 bank failures this year, compared to the S&L crisis.

Caveat: This analysis simply shows the number of bank failures per year, and could obviously be supplemented with data on the number and size of bank failures.

Comments

[jeandit75:]

Caveat: This analysis "assemblage of garbage" (like all other posted by this author) simply shows the number of bank failures per year (or whatever the author want the poor souls to believe), and (as always) could obviously be supplemented with data on the number and size of bank failures (or more accurate fundamental and unbiased figures).

Aug 28 06:53 AM

[Roger Knights:]

See John Lounsberry’s “Comparing Today's Bank Crisis to the Past.” Posted here on Seeking Alpha August 25 at seekingalpha.com/artic... Here’s a snippet:

“Even when adjusted for inflation and population growth, the 2008-09 banking crisis far exceeds previous banking crises, including even the Great Depression. There were 10,000 bank failures in the Great Depression, but few of them had branches. Today, a medium sized bank usually has hundreds of branches and the two big failures, Washington Mutual and Wachovia Bank had more than 8,000 branches between them.

“When it comes to the amount of money involved, the current crisis has 70 times the asset dollars in failed banks compared to the Great Depression. Even when the figures are adjusted for inflation and population growth, the current crisis is still much larger in dollar terms.

[Of course, those 1930s asset dollars weren’t insured by the FDIC.]

“The relationship of the current banking crisis to the size of the economy is more than seven times greater than the worst year of the Great Depression (1933). This crisis is 19 times larger with respect to GDP than the next worst year, 1989, in the S&L crisis.

“Now we have to see how the aftershocks and the financial system structure weakened by the "big one" interact in the coming years. I did not say months; it will take years to repair the effects of an event of this seismic magnitude. Be prepared for the unexpected. We have never gone this way before.”

Aug 28 07:53 AM

[Chris Butler_:]

I think John Lounsberry’s article makes two of my points regarding numbers of branches and % of GDP comparisons (along with a much needed inflation adjustement), I'd add two points that make this author's point seem even less convincing:

1) How many more banks would have failed from the 2008 fiasco had we actually allowed them to fail like we did in the Great Depression? Due to the difference in political will in the two timeframes, we're comparing apples to oranges.
2) What do you say we wait until the "all clear" signal is given in this crisis before we start adding up the damage for comparisons with the Great Depression? We just found out that the FDIC's list of troubled banks has exploded. Presumably, some of those banks are on their way to shutting their doors. Unless, of course, we allow them to mark their troubled loans to fantasy or simply bail them out.

Aug 28 09:51 AM

[j-dub:]

Why supplement real world data when you can spout concepts from fantasy land economics. This man's "data" pertain to no one living in the real world except maybe the 217 poor souls that read this man's writings as a way to stay positive because of the terrible situation they are in.

All those that despise people who love to pretend that 2008 did not happen, PLEASE TAKE ONE STEP FOWARD.

NOT SO FAST, MR. PERRY


On Aug 28 06:53 AM jeandit75 wrote:

> Caveat: This analysis "assemblage of garbage" (like all other posted
> by this author) simply shows the number of bank failures per year
> (or whatever the author want the poor souls to believe), and (as
> always) could obviously be supplemented with data on the number and
> size of bank failures (or more accurate fundamental and unbiased
> figures).

Aug 28 10:15 AM

[john s. gordon:]

so what's the point of this article?
is our old girlfriend rosie scenario back in town?
> jack

Aug 28 10:21 AM

[Donald Ingram:]

Mr. Perry's eternal optimism is laudable, but this sort of article could lead some gullible investors to the wrong choice, so shame on you Sir.
As suggested above, read Mr. Lounsberry's article for the TRUTH of the matter, before spouting any more "feel good" fantasies!

Aug 28 11:07 AM

[CLH:]

The idiots who wrote most of the doom and gloom comments will continue to be losers.

Aug 28 11:28 AM

[drewriders:]

I would like to know not how many banks failed but what was the total dollar amount in assets they held adjusted for inflation.

I am willing to bet a larger amount of smaller banks failed during the depression since we propped up all the big banks this year with tax payer funds.

Aug 28 01:18 PM

[Tack:]

Lounsberry makes frequent, voluminous, seemingly fact-laden assessments of why none of the rally could or should have occurred and beats the pessimistic drums relentlessly. The one small problem he's had is that, so far, anybody who has followed his advice or prepared for "Armageddon" has lost (or not gained) very sizable amounts of money, while they wallow in their despair.

If Loundberry's protestations were the undeniable fact that the true believers claim, rather than just another opinion, it would be unnecessary for the them to shout that they are the one and only "TRUTH."




On Aug 28 11:07 AM Donald Ingram wrote:

> Mr. Perry's eternal optimism is laudable, but this sort of article
> could lead some gullible investors to the wrong choice, so shame
> on you Sir.
> As suggested above, read Mr. Lounsberry's article for the TRUTH of
> the matter, before spouting any more "feel good" fantasies!

Aug 29 10:47 AM