IndyMac Failure — More to Come?
According to the Wall Street Journal, “Banking regulators are bracing for a slew of failures over the next year.” Undoubtably that prediction will come true since bank failures have generally occured when there have been systemic problems in the economy. With further declines in housing values and continued softening of the economy, this is as “systemic” as it gets.
We plotted the 3,559 bank failures and assisted transactions since the FDIC was created. Failures tend to occur in clusters, and if history is a guide there are more on the horizon. Since IndyMac alone is expected to wipe out up to 10% of the deposit-insurance fund (according to the WSJ), banks can probably expect higher deposit insurance premiums on the horizon.
