Bank Failures: Coming Soon to a Neighborhood Near You

FDIC Says At Least 90 US Banking institutions In Trouble

Several points of data indicate a rocky road for banks. According to the Federal Deposit Insurance Corp., the amount of non-current loans, those more than 90 days behind, on the portfolios of its institution has grown rapidly. In the last three months of 2007 and the first three months of 2008, the value of these loans rose by $53 billion to represent 1.71% of all loans from FDIC-insured institutions.

In the case of bank collapse, the FDIC has to step in to insure the value of deposits. Normally the FDIC attempts to maintain a fund at 1.25% of the value of its potential obligations. In recent months, however, this fund has slid to 1.19%, driven primarily by a rise in deposits, said Sheila Bair, chair of the FDIC. If this figure slides further to 1.15% it forces the FDIC to make moves to shore up the fund.

Bair said the FDIC is monitoring 90 institutions with assets of $26 billion that it has identified as troubled. The entire size of the FDIC reserve fund is $52 billion. As a precaution, the FDIC is running bank failure readiness exercises, she said.

Can Banking Shake The Crisis?

While Wall Street and Washington fret about how badly investment banks could damage the economy, Tuesday provided a fresh reminder that commercial banks could be a bigger problem as the second wave of the credit crisis begins its run.

National City (nyse: NCC - news - people ), the Cleveland bank that, in the end, might become the poster child for the credit crisis, confirmed it was under a memorandum of understanding with the Office of the Comptroller of the Currency, the Treasury Department arm regulating national banks. This is a form of heightened scrutiny, though informal and less severe than some other options, and looks at a bank's capital and risk management, loan quality and liquidity.

...Ominously, the Federal Deposit Insurance is staffing up in anticipation of bank failures. It's already tracking 90 troubled banks, 18% more than the end of last year. None of this is good news for the troubled industry, which has been hoping for a rebound.

Monday, New York Fed chief Timothy Geithner, the architect of JPMorgan Chase's (nyse: JPM - people ) rescue of Bear Stearns in March, was drumming up support for greater regulation of Wall Street firms to lessen the risks of systemic meltdown. news -

And.in case you missed it..more news for IndyMac customers:

Deposits are insured up to $100,000 per depositor. As of March 31, IndyMac had total deposits of $19.06 billion. Some 10,000 depositors had funds in excess of the insured limit, for a total of $1 billion in potentially uninsured funds, the FDIC said.

Well, you can pretty much figure that the problems they are actually admitting to are just the tip of the iceberg. Things are bound to get pretty interesting over the next few months.