Analyst predicts 150-200 more bank failures!
NEW YORK - August 24, 2009 - A prominent banking analyst said Sunday that 150 to 200 more U.S. banks will fail in the current banking crisis, and the industry's payments to keep the Federal Deposit Insurance Corporation afloat could eat up 25 percent of pretax income in 2010.
Richard Bove of Rochdale Securities said this would likely force the FDIC, which insures deposits, to turn increasingly to non-U.S. banks and private equity funds to shore up the banking system.
"The difficulty at the moment is finding enough healthy banks to buy the failing banks," wrote Bove.
On August 26, the FDIC is expected to vote on relaxed guidelines for private equity firms to invest in failed banks, after critics said previously proposed rules were too harsh and would actually dissuade firms from making investments.
Bove said "perhaps another 150 to 200 banks will fail," on top of 81 so far in 2009, adding stress to the FDIC's deposit insurance fund.
Three large failures this year - BankUnited Financialin May, Colonial BancGroup and Guaranty Financial Group in August - collectively cost the fund roughly $10.7 billion.
The fund had $13 billion at the end of March.
Richard Bove of Rochdale Securities said this would likely force the FDIC, which insures deposits, to turn increasingly to non-U.S. banks and private equity funds to shore up the banking system.
"The difficulty at the moment is finding enough healthy banks to buy the failing banks," wrote Bove.
On August 26, the FDIC is expected to vote on relaxed guidelines for private equity firms to invest in failed banks, after critics said previously proposed rules were too harsh and would actually dissuade firms from making investments.
Bove said "perhaps another 150 to 200 banks will fail," on top of 81 so far in 2009, adding stress to the FDIC's deposit insurance fund.
Three large failures this year - BankUnited Financialin May, Colonial BancGroup and Guaranty Financial Group in August - collectively cost the fund roughly $10.7 billion.
The fund had $13 billion at the end of March.
