In the mainstream media, all the talk is about how the “recession” is over. But the truth is that our economic problems are far from over. In fact, the U.S. banking system is dying. U.S. banks continue to fail at a record pace. The FDIC list of problem banks continues to grow at an alarming pace. Loans and mortgages continue to go bad at an accelerating rate at banks across the United States. The truth is that we are in deep, deep trouble, and the vast majority of the American people do not even realize it. But the American people better wake up soon, because if the U.S. banking system dies, the American Dream is going to die along with it for tens of millions of Americans.
So far in 2010, 127 U.S. banks have been shut down by federal regulators. That puts us on pace to far surpass the total of 140 U.S. banks that failed last year. And last year was the most bank failures that the U.S. had seen since back in 1992.
So when will the number of bank failures start going down?
Will it ever start going down?
Can the U.S. financial system continue to handle dozens upon dozens of bank failures?
That is a legitimate question.
Unfortunately, it looks like the number of bank failures is only going to continue to get worse.
The number of “problem banks” is increasing at a truly frightening pace.
As of the end of 2008, there were 252 banks on the FDIC problem list.
As of the end of 2009, there were 702 banks on the FDIC problem list.
As we approach the end of September 2010, there are now 872 banks (well over 10 percent of all U.S. banks) on the FDIC problem list.
Does anyone else spot a trend?
So does the FDIC have plenty of assets with which to handle all of these bank failures?
Today, the FDIC is backing approximately 8,000 U.S. banks that have a total of about $13 trillion in assets with a deposit insurance fund that is basically empty.
Well, to be honest, the situation is much more dire than that.
It is actually being reported that the FDIC’s deposit insurance fund is sitting at about negative 20.7 billion dollars.
Negative 20.7 billion dollars?
That’s not good.
And things are going to get even worse.
The FDIC now estimates that the deposit insurance fund will experience a $60 billion reduction due to additional bank closings between now and 2014.
Needless to say, that is not good news.
The U.S. banking system is basically a huge disaster area right about now.
And that suits the biggest U.S. banks just fine.
You see, the truth is that when small banks fail, the big dogs pick up market share.
In an article on our sister website entitled “Are We About To Witness The Greatest Banking Consolidation In U.S. History?“, I discussed the rapidly growing market share of the banks at the top of the food chain….
Back in 2000, the “Big Four” U.S. banks - Citigroup, JPMorgan Chase, Bank of America and Wells Fargo - held approximately 22 percent of all deposits in FDIC-insured institutions. As of June 30th of last year that figure was up to 39 percent.
That is quite an impressive decade of work for the big boys.
And as more “small enough to fail” banks continue to go under, the big banks will be sitting there ready to gobble up the leftovers.
Isn’t our system great?
Meanwhile, there are plenty of signs that part two of the double-dip housing crash has begun.
Meanwhile, health insurance companies have announced that they plan to raise premiums because of the new health care law.
Meanwhile, bankruptcy filings in the United States increased 20 percent during the twelve month period ending June 30th.
Meanwhile, millions of jobs are being outsourced and offshored and they are never coming back.
Is it any wonder that according to a new CNN/Opinion Research Corporation poll, 74 percent of Americans still believe that the U.S. economy is in a recession?
The truth is that the U.S. economy is a complete and total disaster area and we are in deep, deep trouble.
So, do any of you all think that there is much hope that the U.S. economy can be turned around?