Will There Be 100 Bank Failures in 2009?

-- falling dominos --Four more banks failed this past week in the United States, bringing the overall total for 2009 up to 57.

This is quite an increase from 2008 (25) and 2007 (3), but hardly surprising given the current state of the U.S. economy.

The rate at which banks are going under seems to have really picked up steam over the past month or so.

As of June 25th, 40 banks had failed and been taken over by regulators. Now, less than a month later, this figure stands at 57.

A quick trip to the calculator shows us that we are currently on pace to have more than 100 bank failures in the United States in 2009.

Given that the problem bank list continues to swell (at last glance, the list of banks on the "problem bank list" stood at 305), you can safely assume that we will have a good deal more failures in 2009 and into 2010.

Now, 57 failed banks just over halfway through the calendar year is obviously a troubling number, especially when you consider that there were NO bank failures in 2005 and 2006.

However, let's put this into some perspective.

There are currently over 8,500 banks and thrifts currently operating in the United States.

In 1989, the year in which the "Resolution Trust Corporation" was established in the United States, a total of 531 banking institutions failed. This was up from 232 the year before, and 217 in 1987.

In 1990, there were an additional 381 failures in the United States.

It should certainly be interesting to see if the number of failures begins to level off and perhaps even decline in 2010.

It should also be interesting to see if and when we return to 2005-2007 levels. Soon? Never again? Are dramatically higher levels of bank failures set to be an ever-present part of our future?

Filed under: The Economic Meltdown

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