Guardian UK: List of at-risk US banks increases sharply as lenders' profits shrink by 87%

[marmar]

Credit crunch: List of at-risk US banks increases sharply as lenders' profits shrink by 87%
Andrew Clark in New York
The Guardian, Wednesday August 27 2008



An official "watch list" of potentially troubled US banks has lengthened from 90 to 117 as the credit crunch wreaks havoc throughout the financial industry.

The Federal Deposit Insurance Corporation, which guarantees customers' money held in US banks, said the quarterly list was the longest since mid-2003 and is asking its members to increase contributions to a dwindling bail-out fund.

"These are challenging times," said the FDIC's chairman, Sheila Bair, at a press conference. "More banks will come on the list as credit problems worsen."

So far this year, nine US banks have collapsed including California's IndyMac Bancorp, the third largest failure of a high-street bank since the FDIC was created 75 years ago.

The FDIC does not disclose the identity of institutions on its watch list. But it said the aggregate total of assets held by troubled banks had risen from $26bn to $78bn, partly because the FDIC seized control of $32bn at IndyMac.

Profits at US banks fell 87% to $5bn in the second quarter. Bair described the figures as "frankly, pretty dismal". She added: "By any yardstick, it was another tough quarter. We continue to strongly encourage banks and institutions to ensure they have enough reserves to cover losses." .....(more)

The complete piece is at: http://www.guardian.co.uk/business/2008/aug/27/creditcrunch.subprimecrisis

[truedelphi]

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