FXIS Market Insights

The FDIC released the Quarterly Banking Profile for the 4th quarter of 2009 today. 702 banks are on the list of  “Problem Banks”, an increase of 450 since 2008.  Equally disturbing is the increase of failed institutions.  140 institutions failed in 2009 up from only 25 in 2008.

Should we be worried?  Elizabeth Warren, Chair of the Congressional Oversight Panel, believes so as she introduces the COP's February Report "Commercial Real Estate Losses and the Risk to Financial Stability."  She addresses a larger problem that may not be apparent from the FDIC report.  The risk to financial stability from the exposure of some 2900 banks with a “high concentration of commercial real estate loans”.  All banks on that list are smaller community banks which is a rather worrying development. If a large number of community banks were to fail, the impact on the small business community, the real back-bone of our economy, could be devastating.
The full report is available online at: http://cop.senate.gov/documents/cop-021110-report.pdf
Please consider this excellent video.