Bank Closures Not in Line With Forecasts?

It’s been a while since I put up a post on the past week’s bank seizures. They’re isn’t a particular reason other than the fact that the FDIC has been noticeably applying a light touch.

This Friday brought three new seizures along with one that occurred Thursday, bringing the total for the year to 30. None were remarkable but if you want to take a look at the unlucky quartet, here is the link to the FDIC’s website.

So, here we are almost a quarter of the way through the year and 30 banks have been closed. Annualize that and you’re looking at somewhere in the neighborhood of 120 to 150 closures. That’s a lot less than most pundits and self-proclaimed experts forecast for this year. What gives?

My guess is that there’s a tussle between the politicians and the regulators. The party line out of Washington is that things are getting better. The statistics would indicate that’s the case and I suspect that any evidence to the contrary is mostly unwelcome news.

I’m of the camp that believes Americans are not nearly so dumb as to not be able to figure out what the true state of the economy happens to be at any given point in time. Right now, I don’t think they’re buying the Washington buzz and I think the pols know it. Therefore, any real attempt to wash out the bad banks is not going to sit all that well what with mid-term elections looming.

You can point to all of the numbers you want but nothing so focuses local attention as much as closing a community bank. It has a visceral effect on the community and is sort of like seeing your neighbor trying to cope with long-term unemployment as one of those things that truly brings the true state of the country’s woes home.

I could be proved completely wrong on this one, but I suspect that we’ll not deal with the problem of insolvent banks until well after the November elections. Nothing new here, it’s business as usual. Unfortunately, it also retards recovery from this mess.

Just one more example that what emanates from Washington is seldom in your best interest.