Calculated Risk writes there will be many more bank failures, but probably not as many as there were in the 80s and early 90s. From 1982 to 1992, there was a minimum of 100 banks failing per year, with over 500 failing in 1989.
Furthermore, “Unlike IndyMac that failed mostly because of bad Alt-A mortgage loans, most of the coming bank failures will probably be small regional banks with too much exposure to Construction & Development (C&D) and Commercial Real Estate (CRE) loans.”
I believe this forecast to be in line with reality, as there are many states with banks that have contruction and development loans making up very high percentages of their core capital. More banks will fail, but they will be mostly smaller, regional banks. Those that don’t “fail” will be absorbed by better banks. I am starting to believe that a good indicator of an end to this mess will be after a fair amount of consolidation occurs in the regional banking sector.
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