FDIC: "Problem" banks at 16-year high in US

Nov 24, 2009, 22:08 GMT

Washington - The number of US banks in danger of collapse has risen to the highest level in 16 years, a government regulator reported Tuesday in a sign that the country's worst financial crisis in decades is still lingering.

The Federal Deposit Insurance Corporation (FDIC), which guarantees savings deposits at nearly 8,200 banks across the United States, said there were 552 banks on its 'problem list' at the end of September.

The bankruptcies of more than 100 banks, mostly smaller community operations, since the start of 2009 has forced the FDIC into reporting the second-ever loss in its history. The agency, which collects insurance fees from its members, reported a negative balance of 8.2 billion dollars at the end of September.

The loss already forced the FDIC to announce it would collect three years worth of premiums upfront, hoping to raise some 45 billion dollars to guard against more bank failures expected in 2010.

The US financial sector has stabilized somewhat since its near- collapse towards the end of 2008. Yet the FDIC reported 50 banks declared bankruptcy in the third quarter, the most since 1990.

'For now, the credit adversity we have been observing for some time remains with us, and we expected that it will be at least a couple of more quarters before we see a meaningful improvement in that trend,' FDIC Chairwoman Sheila Bair said in a statement.