According to reports from Democracy Now the financial crisis is far from over with many banks around the nation at risk of shutting their doors. In the headline, Federal Deposit Insurance Corporation Chair, Sheila Bair, has said that banks have decreased lending by $587 billion in 2009. She went on to specifically point a finger at major banks saying they need "to do a better job of stepping up to the plate." She also noted that over 700 banks were cited as in danger of failing at the end of 2009.
In a related article published just four days before the aforementioned headline, Damian Paletta of the Wall Street Journal also commented on the situation citing the fact that four banks were shut down from Florida to California just this past Friday! This is an ongoing crisis folks! The following excerpt from Mr. Paletta's article details the largest of these closures, nearby in San Diego California:
"The largest bank to fail Friday was the 10-branch La Jolla Bank in California. Its $3.6 billion of assets made it the biggest bank to fail in 2010. The FDIC sold all of La Jolla's deposits and virtually all of its assets to OneWest FSB, a thrift created last year after investors bought up pieces of the failed IndyMac Bank. The FDIC and OneWest agreed to share future losses on $3.3 billion of the La Jolla Bank's deposits."
What is evident here is the burden on taxpayers through the FDIC. What is perhaps between the lines and not so apparent is the harsh economic realities of what happens when recession hits: Negative speculation grips the market with fear, lending rates go down which stagnates investment and new business and job creation. Home-ownership loans and other forms of personal reasons to borrow money are decreased as fewer people are eligible due to their credit scores, past debts, bankruptcies, unemployment, etc...
Why I think these stats are important lay in other facts. Also on Democracy Now this morning (see link above) and many other times on the show, the fact that while Wall Street bonuses are at an all time high growth rate, and companies like Goldman Sachs are making record profits, Main Street is suffering. The closure of smaller banks indicates the failure of the Obama/Geithner/Bernanke bailout plan to have some sort of "trickle down effect" from the 'bloated' big banks who received the bulk of compensation. I am personally disgusted. Tips on my next post (check the tags at the bottom to see author) on how to support good banks and local credit unions as opposed to those large malpractictioners like B of A, Wells, Chase, Citi.....you get the picture.
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