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Bank Closures Data

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February 20, 2011 – Comments (4)

Just some interesting numbers in regard to bank closures over the past few years. The FDIC has closed:

22 in 2011 (so far) 

157 in 2010;

140 in 2009;

25 in 2008; and

3 in 2007

Problem banks are now up to 860 and the expected total cost through 2014 is about $52 billion. And ultimately all recovery efforts will trickle down to the consumer in the form of bank fees and higher taxes.

Ouch...

Jason

4 Comments – Post Your Own

#1) On February 20, 2011 at 1:45 PM, ikkyu2 (99.36) wrote:

Everything that the Federal government does trickles down to the taxpayer in the form of higher taxes, because we have a fiat currency.  That's not news.

I understand that you don't like it, but maybe you could propose an alternative?  For example, "permit all banks to fail and prove to the world that the U.S. Dollar no longer serves its monetary function as a store of value."  That's an alternative the Federal government could easily have chosen in 2008, simply by doing nothing.  Are you arguing that this is what should have been done? 

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#2) On February 20, 2011 at 3:09 PM, TMFJMo (70.71) wrote:

I am not suggesting that should have been done. Banks encouraged and promoted bad behavior (Everyone else is doing it, why can't I?) and the Federal government was complicit in this via Fannie, Freddie and an utterly absurd tax code. We have to pay a price for this behavior.

The thing is though, I don't necessarily believe that most actually get that point...that all of these costs trickle down. I think that to some that IS news. And they probably still don't care. I am convinced that there is an overwhelming number of people out there who are quite happy with having their choices made for them. I am just not one of them.

We have an incredibly complicated tax code in our country that incentivizes cheating. It promotes bad behavior. This has to change. That's my suggestion...I am doubtful it will ever happen because there are too many different interests and too many hands in the cookie jar. Of course I hope I am proven wrong. As it stands now though, our tax code is insulting and as time goes on it becomes more nebulous. Until something is done about this, the rest is just left twisting in the wind.

When you spend more than you make, eventually you're gonna get called on it...

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#3) On February 20, 2011 at 8:33 PM, TARPedBanks (< 20) wrote:

I'm curious how you conclude FDIC bank closures will lead to higher taxes?

Higher bank fees, maybe, since the FDIC is funded entirely by fees charged to banks for the insurance.  Those fees are likely go up to cover the failures and reach the higher deposit insurance fund levels mandated by the Dodd-Frank legislation.  Those fees will probably be passed on to bank customers.

For those who may be interested, here's a video clip from the FDIC explaining deposit insurance.

 

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#4) On February 20, 2011 at 10:04 PM, TMFJMo (70.71) wrote:

I agree with you on the higher bank fees. Hopefully that covers it. But who backs up the FDIC?

Anytime the Federal government guarantees anything, you have to keep in mind where they get their money from.

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