Things aren't getting any better for the US economy. And now the FDIC, which insures bank deposits up to $100,000, has added 117 banks on its "troubled bank" watch list:
Thanks to a collapsing housing market and a weak economy, a growing number of banks are struggling to stay afloat, with not enough cash on hand to cover losses from bad loans.
At the beginning of the year, 90 banks were on the FDIC watch list. There are now 117, FDIC chairwoman Sheila C. Bair announced at a news conference this afternoon. That is the highest number in five years, but some analysts expect the list to grow even more in coming months.
"I think there's going to be a steady drip, drip, drip of bad news," said Sean Ryan, a banking analyst with Sterne Agee. "We've only seen the very tip of the iceberg in terms of bank failures."
Even though only nine banks have failed so far this year, Ryan expects that to quickly climb with more than 100 failures before the end of 2009.
"I would be quite surprised if we didn't reach triple digits," he said. "Most of them are going to be relatively small institutions, but they will add up."
The FDIC doesn't name the banks, because if the list were known, then customers would pull their money out of the troubled banks and cause them to fail: Link
"Principal and interest on insured accounts, through , are fully insured by the FDIC, up to the insurance limit of $100,000. You will receive full payment for your insured account. Certain entitlements and different types of accounts may be insured for more than the $100,000 limit. IRA funds are insured separately from other types of accounts, up to a $250,000 limit."
Creating a sense of panic only exacerbates the problem (looking at you, WallStreetBanker). Of course, if you base critical financial decisions on casual blog posts, you are probably already in trouble.