Bankruptcy

U.S. regulator fears wave of bank failures

By J. Michael McBride

“U.S. bank failures could be on the rise as a weakening economy puts pressure on badly underwritten loans.” John Dugan, who is the comptroller of the currency for about 1700 national banks, said “the growing problems for lenders follows a period of almost four years in which no institution regulated by its agency had failed.” Dugan said “it is a natural consequence of the economy going from historically exceptionally benign credit conditions to something that is more normal to something you would get in a downturn.”

Mr. Dugan’s comments come at a time when U.S. banks report big spikes in expected losses on consumer and small business loans. “The largest U.S. banks, including Citigroup and Bank of America, have seen loan losses increase as more consumers fall behind on home equity, credit card, automotive and other consumer loans.” However, Mr. Dugan said he did not “expect failures to rise as high as during the late 1980’s when 534 banks failed in 1989 alone”. He said that “banks are now better capitalized, have better underwriting standards and did less speculative lending than during the late 1980’s and early 1990’s.”

Here is the link to the full article:
http://www.ft.com/cms/s/0/c4e0c530-10b1-11dd-b8d6-0000779fd2ac.html?nclick_check=1

Yameena

Full post as published by Texas Lawyer Blog on April 24, 2008 (boomark / email).