raptor wrote:While it is not officially the end of 2009 I am going to predict that the number of banks closed in 2009 will be 140 and that the FDIC will not close any banks this week and thus the count will be a nice even 140 banks.
Got any bets on 2010?
That is a difficult prediction:
1) The economy has not started to recover though it has IMO stopped getting worse.
2) There are record federal deficits that boggle my mind and interest rates are already effectively at zero. This means less latitude by the Fed to add stimulus to the economy. Thus a double dip recession becomes very possible.
3) The FDIC is effectively insolvent and has already borrowed against future premium revenue to make up for the current deficiency. Thus they will not be in a hurry to close banks if they can avoid it.
4) There are over 500 banks on the FDIC watch list though in normal times only a small % of these banks are closed. Still 5% of 500 is 25 and 140 is 28%.
5) Real estate is not really recovering just stabilizing. Loans on real estate was a key component in many bank failures.
6) Commercial real estate will see more loans coming up for renewal in 2010 thus ditto #5.
7) Most of the banks closed in the last few months have found buyers unlike earlier in 2009 when the FDIC was closing banks and writing checks to depositors. I suspect more troubled banks will have shotgun weddings instead of closures. There is now a market for these troubled banks albeit with the FDIC providing a dowery at the shotgun wedding. This means fewer closures and more mergers.
8 ) The US dollar has strengthened in the last few weeks which to me is very surprising. This IMO indicates anxiety in other countries financial condition and people escaping to the "security" of the US dollar. This could indicate that other economies are not recovering as current stats indicate. It could also indicate that money is flowing into the US to buy "cheap" US goods while the exchange rate is favorable. I am not sure on this one, but it is odd.
9) The FDIC just hired a large number of employees so they are clearly gearing up for continued closures and oversight. I have no doubt that we will see the number of banks closed keep up a steady pace in the first quarter of 2010.
With all of the above in mind I am going to predict that the maximum number of banks closed in 2010 will not exceed 2009's level of 140 but that a minimum number of banks closed will not be less than 60 banks. I think a more probable range is between 80 and 110 closures (excluding mergers).
Edited to add:
Dogbane provided this link and it is a good supplement to the http://www.thestreet.com
" onclick="window.open(this.href);return false; and http://www.bankrate.com's" onclick="window.open(this.href);return false; bank review data.
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This site allows you to put in a zip and a healthy local (read small) bank in your area. If you are thinking of moving your money this site provides suggestions. I do suggest that you use one of the two sites above to verify that data.