FDIC Quarterly Banking Profile offers some insight to banks’ status
As we await the results of the Federal Reserve Stress tests, the FDIC quarterly tells us much of what to expect. This report is a roll up of all banks in the US, and it provides some interesting stats. The numbers are broadly negative over the periods since 2002, and since last year. Banks are highly levered, and at their most levered for the duration of the reporting periods back to 2002.
The Quarterly Banking Profile is a quarterly publication that provides the earliest comprehensive summary of financial results for all FDIC-insured institutions.
- Capital – $ 1.3 Tn
- Loans – $ 7.9 Tn
- Leverage – 7.49% (worst since 2002)
- # of banks 8,305 – note, only down 1,000 since 2002
The FT sums up the report, noting that we don’t have to await the stress test to realise the outcomes. There will be some blood on the table before this exercise is over, and it will continue to keep banks eyes off customer and service development.
The banking system is severely undercapitalized, with numerous insolvent banks. Clearly a more robust banking system requires far more capital and a robust loan loss reserve adding to the capital cushion. Until the trillion plus of impaired assets are removed and the banking system is recapitalized, credit flows will be restricted. In this context, it is puzzling why the administration is tinkering at the fringes with programs designed to enrich Wall Street. Geithner and Summers need to address the banking problems square-on.