SEATTLE, Jan. 7 /PRNewswire/ -- According to its own estimates, the Federal Deposit Insurance Corporation (the "FDIC") will sustain losses exceeding $36 billion owing to the 140 banks that failed in 2009. By comparison, those losses will eclipse the total dollar amount of the losses the FDIC incurred during the six years spanning 1987 through 1992 (inclusive), when 1,049 banks failed at a total cost to the FDIC of $29.6 billion.
These latest findings are contained in a report produced by Meridian Group of Seattle. The Meridian report compares bank failure statistics from this latest banking crisis to bank failure statistics from the savings and loan crisis of 20 years ago and concludes that this latest banking crisis is the worst crisis the FDIC has ever faced and that 2009 was the costliest year ever for bank failures.
In the previous savings and loan crisis, the average failed banking institution had total assets of $205 million. In 2009, the average banking institution that failed had total assets of $1.2 billion. Perhaps more importantly, the average banking institution that failed during the savings and loan crisis cost the FDIC $28 million. In 2009, the average failed banking institution will cost the FDIC an estimated $261 million.
"Each time a bank failed in 2009, we heard that - bad as it seemed - 2009 wasn't as bad as 1989, when 534 banks failed," said Meridian CEO Darren Berg. "But that's simply not true. In fact, 2009 was the worst year ever for bank failures. In 2009, the banks that failed were significantly larger, roughly 6 times larger on average, than the banks that failed during the savings and loan crisis. Worse yet, losses have skyrocketed - on average, the FDIC is sustaining losses of nearly 10 times more per failed financial institution than it sustained during the savings and loan crisis of 20 years ago."
The Meridian report stops short of making a prediction for 2010. Rather, it offers an "observation" for the future. "Given the secrecy surrounding the FDIC's Watch List, it's difficult to accurately predict the cost of looming bank failures," said Berg. "But in light of the fact that the FDIC continues to add staff at a frantic pace, we believe it's reasonable to assume the worst is yet to come."
ABOUT THE MERIDIAN GROUP OF COMPANIES - Founded in 1987 and based in Seattle, the Meridian Group of Companies is a collection of 13 companies that span the financial services, mortgage lending, software, and transportation sectors. Companies owned by Meridian include two newly introduced real estate opportunity funds focused on purchasing residential land assets at significant discounts from failed financial institutions. For more information, visit www.meridiangroup.net.
SOURCE Meridian Group of Companies