150 More Banks May Fail

Following the collapse of IndyMac Bank there's a report that 150 more banks may fail in the next few years:

As home prices continue to decline and loan defaults mount, U.S. regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?

The nation's banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.

But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

This reminds me an awful lot of the mid-1980's when I was in the middle of the S&L crisis. Institutions were failing every other day and the ones that didn't fail were merging. We could be in for a similar time in the banking industry.

My experience with a takeover by the Feds was mentioned in this post.

Of course, if Chuckie Schumer writes any more letters, who knows how many banks will fail:

"At a news conference Sunday, the New York Democrat deflected blame cast upon him by regulators for causing a run on the bank that saw depositors withdraw more than $1.3 billion during the 11 days after Schumer released a letter about the possible risks of IndyMac failing."