Why don’t banks fail anymore

An example of some of the most boring writing in the world:

And there are some clouds on the banking horizon. While loan delinquencies are very low by historical standards, the FDIC’s Brown notes that small banks are very active in commercial real estate and commercial lending. “Construction and development lending last year rose 33 percent for FDIC-insured institutions, the fastest since 1986,” he said. Also, he notes, some failures in recent years stemmed from problems in subprime loans. Now—in a situation where interest rates are trending upward, the housing market is rolling over, and subprime borrowers are generally under financial stress—that may add up to some problems. “The immediate outlook is pretty good,” said Brown. “Longer term, there will be more bank failures; credit will deteriorate from where it is.”

But for now, the streak is still intact—when the sun sets tonight, it will be 640 days and counting. For bankers, it’s still a wonderful life.

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~ by Rob on May 9, 2007.

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