1,000 Banks to Fail In Next Two Years: Bank CEO, page 1

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Topic started on 28-8-2009 @ 08:12 AM by warrenb

The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.

“We’ve already lost 81 this year,” Kanas told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.”

“Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”

www.cnbc.com...

If I understand the implications...smaller banks will close and the bigger ones will just get bigger?
Anyone care to clarify this?
Isin't this one of the things that happened during the Great Depression?

Bank Failures Cause the Great Depression

The impacts of the pressures on banks are apparent in simple counts of the numbers of banks. In the early years of the Depression, banks with loans to investors in the stock market were immediately at risk. Bank runs compounded these problems even for apparently healthy banks. Of the more than 25,000 banks in business in 1929, fewer than 15,000 survived to 1933.

The collapse in the banking sector precipitated a parallel contraction in the money supply. A severe contraction in the money supply, whether as a result of a policy or as a result of bank failures, then leads to a severe contraction in economic activity.

www.econreview.com...

So in a nutshell, we are far from being "out of the woods", contrary to MSM opinion suggesting we are near to being out of the woods.

reply posted on 28-8-2009 @ 08:41 AM by truthquest

reply to post by warrenb

I think its important to realize the strong deflationary pressures on our US dollar as a result of these bank failures. The money charts that people are frequently shown on ATS and other places do not fully account for debts used as money. And because debt is used as money it makes our financial system so complicated its so far as I can tell impossible to predict when inflation or deflation will hit.

A lot of people expect inflation to hit hard because the M0 (basic money supply) has doubled or more. But in fact the M0 has been a trailing indicator meaning the money supply has increased only after debt has increased. Debt being used as money means that someone has written you an IOU, and then you basically pass along (spend/invest) that IOU as if it were money. The only inflation threat would be if the governments can manage to build up debts faster than the private sector reduces them firstly through bankruptcies and also by paying down debts.

Of course there is the confidence factor that could just destroy the dollar regardless. But with the threats of deflation through bankruptcies and other debt reductions, there really isn't so solid of a basis for confidence in the dollar to shrink. Of course if US dollars were not fundamentally worthless and faith-based, we would likely not have to worry about it in the first place.

[edit on 28-8-2009 by truthquest]

reply posted on 28-8-2009 @ 08:43 AM by dugganj83

I'm not really convinced by this claim:

"Bank Failures Cause the Great Depression"

I know they go into a little more detail, but it just makes me want to ask;

What caused the bank failures?

That's probably a more important question.

I think we have to see some banks collapse. A lot have been irresponsible, and if we bail them out, no-one will ever learn, they'll just get used to their socialism for the rich.

reply posted on 28-8-2009 @ 01:41 PM by lucentenigma

reply to post by warrenb

Warren I didn't see your thread before posting the same thing. Sorry about that.

Anyhow, I have have been posting that idea that the FDIC could be insolvent. If you do the math the FDIC should be broke. I read in one article how the FDIC may have to borrow from the treasury to cover the cost's that will be incurred from more bank failures.

Printing more money to pay for taxpayers insured money, seems like a negative feed back loop, plus printing more money is just another way of monetizing debt.

Are they really that stupid or is it plain arrogance?

Here are a few links on topic with your post.

FDIC Failed Bank List
FDIC troubled bank list grows to over 400
Bank Implode-O-Meter

reply posted on 28-8-2009 @ 01:54 PM by warrenb

reply to post by lucentenigma

hey no worries
ATS allows same thread in different categories