FDIC's Bair: Bank Failures Will Peak In 2010
Michael S. Derby
DOW JONES NEWSWIRES
Nov. 10, 2009
NEW YORK (Dow Jones)--Federal Deposit Insurance Corp. Chairman Sheila Bair said Tuesday that more banks are set to fail.
"We do obviously have a lot more banks that will close this year and next," Bair said, adding the failures ???will peak next year and then subside."
Bair was responding to audience questions at an event held in New York by the Institute of International Bankers. Bank regulators have shuttered more than 100 banks this year as the financial crisis has exacted a heavy toll on the banking sector, a sharp rise from what's been seen over recent years.
The official also said she was disappointed about the state of bank credit right now, saying "none of the large institutions are doing a good job of lending right now." She added, "it used to be you take deposits and lent out money, and we???d like to see more of that."
But Bair recognized banks are under stress, and that they may need a "prod" from government officials to get them lending more.
In her formal remarks, Bair said she believes financial sector legislation under consideration by the U.S. Congress will be tweaked to eliminate government assistance for firms nearing failure and to prevent the U.S. from taking stakes in institutions.
Bair indicated her understanding that legislation proposed by Rep. Barney Frank (D., Mass.) regarding the treatment of firms deemed too big to fail will be strengthened "so that firms that fail are closed."
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