Barry Ritholtz has a weekly series where he tracks the number of accumulated bank failures with almost 276 banks closed already. This year is on track to surpass 2009 and we are on track to close around 200 failures. To put that into perspective, the FDIC insures deposits of 8305 banks and savings associations. (click to enlarge)
The good news is that we seem to have hit the second derivative and 2010 is probably going to be the peak year … and if mortgages continue to stabilize it looks very unlikely that we will hit the 1000 failures that many projected in 2008. Some commentators are complaining about an FDIC slowdown caused by depleted reserves. The numbers do not seem to indicate that yet. (click to enlarge)
This does not mean that there were no capital deficiencies at the beginning and most of the initial problems were caused by large institutions (ie: IndyMac and Washington Mutual). But it seems that TARP and capital infusions, some of them causing significant dilution like Citigroup’s (C), succeeded in softening the blow to this critical sector. In the next part we will share graphs from a recent SEC survey that seem to indicate that banks are becoming more willing to lend.