U.S. Banking Crisis Worsens Amid More FDIC Bank Closures
In 2009 the United States experienced its worst year for bank closures since 1992. It now looks like 2010 will be an even more critical year for U.S. banks, with the FDIC on pace to exceed the 2009 record of 140 banks closed. With three more banks shut down by the FDIC after the Friday news cycle slowed for the weekend ( the customary bank shut down procedure for the FDIC), the total number of bank failures for 2010 already stands at 86.
Why are so many U.S. banks being closed after the U.S. Treasury Department’s vaunted bank stress test last spring declared America’s financial institutions to be healthy and well capitalized? Because, as I stated in my blog comment at the time, the so-called banking stress tests were a complete charade. In reality, much of America’s banking and financial system is virtually insolvent, and about to face an implosion in commercial real estate valuations polluting its balance sheets, along with the asset erosion that will be worsened by the pending double dip recession.
The global economic and financial crisis is far from over. The next phase in the deteriorating banking crisis in America, the UK and Eurozone points to a global recession morphing into a worldwide depression.