Bank Failure Friday

It's Saturday morning, so that must mean it's time for an article about all the banks the feds seized yesterday. That makes 81 failures this year.

Perspective: from 1982 to 1992, which includes the S&L blow-up, banks were closing by the hundreds, so 81 failures seems like a return to normal failure rates after a decade and a half of deregulation and extremely lax enforcement. But what is different this time around is that part of that deregulation has resulted in a smaller number of much larger banks. The assets of the 1,000+ banks in the S&L clean-up totaled $519 billion. Not a shabby amount by anyone's accounting. But with just over 100 bank failures in 2008 and so far in 2009, the FDIC has already forked over $300 billion, and that doesn't include any of the bail-out money, which adds another trillion (conservatively) or two (more likely).

So where are we? Uncharted waters, mostly, which historically favors the fast and the small.