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The nation's banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.
The Federal Deposit Insurance Corp. said Thursday that U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier.
Regulators said there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter.
Pasadena, Calif.-based IndyMac Bank collapsed in July and cost the federal deposit insurance fund nearly $9 billion, and Seattle-based Washington Mutual Inc. was the largest U.S. bank failure ever. WaMu fell in September, with around $307 billion in assets, and was acquired by JPMorgan Chase & Co. for $1.9 billion in a deal brokered by the FDIC.
The FDIC now believes U.S. bank failures will cost the deposit insurance fund more than $40 billion over the next four years amid the ravages of rising unemployment and falling home prices that have sent loan defaults soaring.
Fourteen federally-insured institutions already have failed this year, extending a wave of collapses that began in 2008 _ when regulators shut down 25 U.S. banks. Last year's tally was more than in the previous five years combined and up from only three bank failures in 2007.
The failures sliced the amount in the deposit insurance fund to $18.9 billion as of Dec. 31, from $52.4 billion a year earlier.
The FDIC on Friday will propose raising the insurance premiums paid by U.S. banks and thrifts. That will follow a plan to rebuild the deposit insurance fund put in place in October that increased average premiums to 13.5 cents for every $100 of banks' deposits from 6.3 cents.
U.S. banks and thrifts in the third quarter suffered a 94 percent drop in profits to $1.7 billion, from $27 billion in the same period in 2007. The institutions wrote off $27.9 billion in loans as uncollectible during the July-September quarter.