With Hundreds of U.S. Banks Still in Jeopardy, Credit Crunch May Last for Decades
Although the American economy and the global economy both appear to be stabilizing, the U.S. banking sector nevertheless continues to struggle. By late 2009, more than 100 banks had collapsed in the U.S. during the year. That compares to just three bank failures in 2007 and 25 bank collapses in 2008. The Federal Deposit Insurance Corp. maintains a "watch list" of problem banks, those with troubled finances. In August 2009, that watch list contained 416 banks, so experts predict that half or more of those banks could also fail in the coming years.
Why Banks Face Long Road to Recovery
Even if the economy were to miraculously bounce back to complete health overnight, it would not safeguard many financial institutions. "Banking industry performance is, as always, a lagging indicator," FDIC Chairwoman Sheila Bair said in 2009, reminding the public that problems always take longer to work their way through the banking system.
Speaking of the FDIC, it is important to note its role in keeping banks healthy - and how that ultimately plays a key role in banks' ability and willingness to extend credit or loans to you. In 1933, under the Glass-Steagall Act, President Franklin D. Roosevelt created the FDIC to provide deposit insurance to banks. The goal of this deposit insurance was to assure the public that money put into any FDIC member bank was safe, secure and "backed by the full faith and credit of the United States government." So since Jan. 1, 1934, the FDIC has insured bank deposits in America. Back then FDIC insurance coverage guaranteed your deposits to the tune of $2,500 (a lot of money during the Great Depression). Before that time, if you had money in a bank, and that bank failed, your hard-earned savings was often completely wiped out.
The FDIC, Banks, and Your Ability to Get a Loan
Why Banks Face Long Road to Recovery
Even if the economy were to miraculously bounce back to complete health overnight, it would not safeguard many financial institutions. "Banking industry performance is, as always, a lagging indicator," FDIC Chairwoman Sheila Bair said in 2009, reminding the public that problems always take longer to work their way through the banking system.
Speaking of the FDIC, it is important to note its role in keeping banks healthy - and how that ultimately plays a key role in banks' ability and willingness to extend credit or loans to you. In 1933, under the Glass-Steagall Act, President Franklin D. Roosevelt created the FDIC to provide deposit insurance to banks. The goal of this deposit insurance was to assure the public that money put into any FDIC member bank was safe, secure and "backed by the full faith and credit of the United States government." So since Jan. 1, 1934, the FDIC has insured bank deposits in America. Back then FDIC insurance coverage guaranteed your deposits to the tune of $2,500 (a lot of money during the Great Depression). Before that time, if you had money in a bank, and that bank failed, your hard-earned savings was often completely wiped out.
The FDIC, Banks, and Your Ability to Get a Loan
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