Something to keep your eye on:
Even though financial stocks have rallied nearly 70 percent since the end of March, the Federal Deposit Insurance Corporation issued another grim quarterly report Thursday on the health of the nation’s banks.
The agency reported that the banking industry lost $3.7 billion in the second quarter amid a surge in bad loans made to home builders, commercial real estate developers and small and midsize businesses. Its deposit insurance fund dropped 20 percent, to $10.4 billion, its lowest level in nearly 16 years. And the number of “problem banks” increased to 416, from 305 in the first quarter, and is expected to remain high.
Indeed, federal officials warned that while the economy and financial markets were showing signs of improvement, the banking sector was unlikely to rebound soon.
“These credit problems will at least outlast the recession by a couple of quarters,” said Sheila C. Bair, the F.D.I.C. chairwoman. “Cleaning up balance sheets is a painful process that does take time, but it is absolutely necessary to the industry’s sustained profitability.
When do you all expect the CRE crash to hit?