More bleak news for small to midsize banks. According to the FDIC, the number of failed banks this year has risen to 84 as regional banks in Maryland, Minnesota and California declared closure Friday.
Bigger banks like Citi and Morgan Stanley have been kept afloat by bailout funds which meant they’re kept safe. However, small to midsize banks (to which these failed banks belong) don’t have the same support since they have less of an economic impact compared to big banks with trillion-dollar assets.
Analysts say that more bank failures are likely as the continuing economic crisis forces people to default on loans – the prime reason that most small banks got into trouble. The mortgage and unemployment crisis have disabled their client’s means to pay back loans and now, they’re the ones hurting.
As for the depositing public, the FDIC assures that, in case of bank failures, depositors will still be able to access their money over a period of time through checks, ATM and debit cards. The FDIC covers account balances up to $250,000 per depositor.
Source: CNN
