FDIC says bank losses were worse than thought in 2008

Bank stocks led the market higher over the past couple of weeks -- the KBW Bank Index of 24 big financial institutions surged 62 percent from March 6 to last Wednesday, compared to a 16 percent gain for the S&P 500. So perhaps it's only fitting that sobering news from a bank regulator killed the market's buzz.

Speaking at the same conference of community bankers as Fed Chairman Ben Bernanke addressed Friday, Federal Deposit Insurance Corp. Chairwoman Sheila Bair predicted that bank failures would cost her agency $65 billion over the next five years. A little later, her office released a revised tally of banks' losses in the final three months of 2008. The new figures showed the industry actually lost $32.1 billion last quarter, up from $26.4 billion.