California Regulators Preparing for Major Wave of Bank Failures

The Federal Deposit Insurance Corp. [FDIC] disclosed Friday that six more California banks have received “cease and desist” orders that spell out publicly what the banks must do, such as boost capital levels, beef up management and rein in risky loans. The FDIC also Friday disclosed that it had ordered the banks to clean up their acts in February after the agency examined their books and operations.

The number of such regulatory actions, notes LA Times, has been increasing rapidly, suggesting regulators are preparing for a major wave of failures.

Anaheim-based banking consultant Gary S. Findley predicts that by the end of 2009, two-thirds of the state’s banks will be operating under cease-and-desist orders or other regulatory actions. [via LA Times]