The FDIC's swelling list of banks on the brink

It's no secret that the financial sector is struggling. Even so, new figures from the Federal Deposit Insurance Corp.'s so-called secret list of troubled banks show an industry in increasing distress. The number of banks on the regulator's confidential watch list increased by 33% in the third quarter, to 552, the highest level in almost 16 years, the FDIC said Tuesday.

Worried about souring mortgages and other toxic assets, the more than 8,000 banks with deposits backed by the FDIC sharply raised the amount they set aside to cover loan losses, dampening their profitability. The agency keeps the names of banks on this 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.