Published: September 21 2010 09:57 | Last updated: September 21 2010 15:55
Awaiting reports of bank closures has become something of a Friday evening ritual in some corners of the US financial market. Last week was worse than average. The Federal Deposit Insurance Corporation shut six institutions, bringing the year’s total to 125. Though still less than last year’s 140, the worst since the Savings & Loans crisis, at the current rate 2010’s tally will come to 176.
The quicker pace of failures may seem to fit badly with signs that the banking sector is finally in recovery mode: the second quarter was the US banking sector’s most profitable since 2007 according to the FDIC. But size matters. Overall, loan loss provisions rose at the slowest pace since early 2008; they fell at more than half of the big banks and in less than 40 per cent of the smaller ones (assets under $1bn).
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