Bank failures will keep accelerating into 2010 and the worst isn’t over despite “some encouraging signs” that things are turning around for the battered banking industry, FDIC Chair Sheila Bair told CNBC.
“There’s a lag generally with bank recovery from the overall economy,” she said. “We do think bank failures will continue to go up next year but will peak. Even at higher levels than we have this year, it’s still far below where we were during the S&L days.”
Over the weekend regulators shut down 3 more banks in Florida, Arizona and Kansas; pushing up US bank failures to 133 so far this year.
Mrs. Bair recognized the fact the insured depository institutions are having their share of problems, but said “it’s really much lower than it was during the S&L days simply because most of this occurred outside the insured banks”.
Bair also said she is encouraged by legislative efforts to reform the banking industry.
“I think there are a number of very positive features that will impose—reimpose, I hope—significant market discipline on these large institutions. We need that right now,” Bair said.
