More Than 700 Banks Are on FDIC's 'Troubled' List

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The number of U.S. banks considered "troubled" has reached a level not seen since the savings and loan crisis of the early 1990s, the Federal Deposit Insurance Corp. announced Tuesday, even as the banking industry as a whole generated a small profit in the fourth quarter of 2009.The FDIC's so-called problem bank list jumped to 702 institutions in the fourth quarter, up from 552 in the third quarter, putting further pressure on the agency's already strained insurance fund, which ran a deficit of $21 billion for 2009. Not since 1993 have so many institutions been on the FDIC's list, although the industry does appear to be on the mend.

"Consistent with a recovering economy, we saw signs of improvement in industry performance," said FDIC Chairman Sheila Bair (pictured) in a statement. "But as we have said before, recovery in the banking industry tends to lag behind the economy, as the industry works through its problems assets."

Banks swung to a small profit in the most recent quarter, earning $914 million, versus a loss of $37.8 billion in the final quarter of 2008. Most of that improvement was driven by large banks, the FDIC said, although for the first time in three years, more than half of federally insured institutions reported increases in profit compared to a year earlier. "It's not that this was a strong quarter; it's simply that everything was so bad a year ago," Bair said.

The agency keeps the names of banks on the problem list under wraps to protect them from debilitating runs by depositors, which could destabilize them further. However, the FDIC does publish aggregate figures derived from its examinations of their books.

Another 45 institutions failed during the fourth quarter, bringing the total number of bank failures for 2009 to 140, the highest annual total since 1992, the FDIC said. The agency insures deposits at more than 8,012 institutions with in excess of $13 trillion in assets.
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