By Karey Wutkowski
WASHINGTON (Reuters) - The U.S. government insurance fund used to safeguard bank deposits dropped to a balance of negative $8.2 billion in the third quarter, the first time since 1992 that it had a negative balance, the Federal Deposit Insurance Corp said on Tuesday.
However, the FDIC has access to cash through a plan to have the banking industry prepay three years of assessments, and also has the option to tap a $500 billion line of credit with the Treasury Department.
The agency said in its quarterly banking report the decline in the insurance fund was due to an additional $21.7 billion the FDIC set aside in the third quarter for expected bank failures. At the end of the second quarter, the FDIC's insurance fund had $10.4 billion.
The number of banks on the FDIC's "problem list" rose 33 percent during the third quarter to 552, the highest level since 1993.
The U.S. banking industry as a whole managed to post a profit for the quarter of $2.8 billion due to growth in operating revenues and a rebound in securities values. Last quarter, the industry lost $4.3 billion.
High loan loss provisions continued to weigh on bank earnings, the FDIC said. Industrywide, banks set aside $62.5 billion to cover deteriorating loans during the quarter, a 7.1 percent decrease from the prior quarter.
"The credit adversity we have been discussing for some time remains with us, and we expect that it will be at least a couple more quarters before we see a meaningful improvement in that trend," FDIC Chairman Sheila Bair said in a statement.
Bair said she was optimistic that if the banking industry addresses its problems head-on, it will see signs of improvement in earnings and lending in 2010.
So far this year, 124 U.S. banks have failed, the highest annual level since 1992.
(Reporting by Karey Wutkowski)
Publié le 24 novembre 2009 Copyright © 2009 Reuters
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