Alfred Chan's List: WSJ 08-08-27

• Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday her agency might have to borrow money from the Treasury Department to see it through an expected wave of bank failures.
• Ms. Bair said such a scenario was unlikely in the "near term."
• The FDIC said Tuesday its "problem" list of banks at risk of failure had grown to 117 at the end of June, compared with 90 at the end of March.

• The fund's balance fell in the second quarter to $45.2 billion. That is just 1.01% of all insured deposits, low by historical standards.

   

  The biggest dent came from the July 11 failure of IndyMac Bank, which the agency now says is expected to cost $8.9 billion.
• In another move to bolster the insurance fund, Ms. Bair said the agency will propose in October charging higher premiums to thousands of U.S. banks.

  • The FDIC has been wrestling with how much to raise the fees because the extra expense would put stress on already struggling financial institutions.
• The FDIC was created during the Great Depression, and in 1990 it received the authority to borrow short-term funds from Treasury. It tapped that facility in 1991 and by June 1992 had accumulated loans of $15.1 billion. The money was repaid by August of the following year.

  • at the tail end of the savings-and-loan crisis
• FDIC's quarterly review
• the U.S. banking industry reported net income of $5 billion in the second quarter, the second-lowest level since the end of 1991. Also, the amount of loans and leases banks wrote off entirely jumped in the quarter to $26.4 billion, the highest level since 1991.
• The percentage of "noncurrent" loans and leases -- such as those more than 90 days past due -- hit 2.04% at the end of the second quarter, the highest level since 1993.
• Firms set aside $50.2 billion to cover such loans, more than four times the amount of a year ago.

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