For the first time in three years, the number of U.S. banking failures should total less than 100.
Total bank closings for 2011 currently total 90. The FDIC has been giving their closing teams some time off, with the last bank closing occurring on November 18, 2011.
Bank closings usually occur on Friday and unless there are an unusually large number of closings this week, total banking failures for 2011 should decline to the smallest number since the banking crisis began in 2008. Regulators do not usually close banks prior to holiday weekends and after this Friday, the last two Fridays of the year precede the Christmas and New Year holidays.
During the past five years, a total of 415 banking institutions have failed. The largest number of bank failures occurred in 2010 with 157 bank closings.
Although the number of failed banks has declined this year, the number of banks on the FDIC’s Problem Bank List has remained relatively constant since the last quarter of 2010. As of September 30, 2011, there were a total of 844 banks on the Problem Bank List. Problem banks account for over 11% of all federally insured banking institutions.
Although the number of problem banks remain large, assets at problem banks total only $339 billion, a fraction of total FDIC insured deposits of $6.78 trillion. The largest “too big to fail” banks that control the bulk of banking assets constitute the biggest threat to the stability of the financial system. Ominously, the financial health of large banks remains tenuous according to many banking analysts (see 29 Banks That Could Destroy The Global Economy).