After many years of blogging, and consistent with my desire to move toward retirement, we have ended the Insights blog. Thanks to Doug Bedell for his years of blog support.

Bank Closings ‘In Perspective’

Posted on March 26, 2010
Filed Under Business | Leave a Comment

It’s work these days to keep things in perspective but it’s worth the effort. For instance, we’ve just had the 41st bank closing in 2010. Forty-one banks shuttered, and the year isn’t three months old. Sounds like a lot, doesn’t it?  Not really, maybe.

When you head over to the Federal Deposit Insurance Corp.’s website, you find that there were “thousands” of bank failures in the 1920s and early 1930s, which, as we know, led to the formation of the FDIC itself.

Now when a bank closes, depositors are insured up to $250,000 per account so nobody looses any money, unless they foolishly kept more than a quarter million in a given account.

The four banks that were just closed will cost the FDIC insurance fund around $320.3 million and $100 billion is expected to be needed to cover failed banks over the next four years. But no matter, the FDIC currently has $66 billion in cash and securities in reserve, and the government is likely good for the rest.

So get inured to bank closings, they’re nothing to lose sleep over anymore. Neither are continued layoffs by state governments, nor the problems young people are having finding jobs – the recovery is gaining strength, isn’t it?

© iStockphoto/ilbusca

Unsettling times indeed. They call for policies to unleash the creativity and ability available in the American people. We don’t know quite what those policies ought to be, but we were heartened to hear that part of the supplemental health care bill that Congress just passed to “fix” the first one included “education provisions that help students with loan payments.

“The education related initiatives funded by the law are fully paid for by ending the government subsidies currently given to banks and other financial institutions that make guaranteed federal student loans,” the White House said in a statement.

So maybe the banks aren’t getting entirely solicitous treatment after all.  Hard to say.

Wherever we’re headed, we certainly feel there’s a role for creative, compassionate government, one that unlocks potential and doesn’t simply hoard whatever it is that anti-government politicians seem to feel needs hoarding.

Do your job Washington, and keep us informed every step of the way. We’re rooting for you. And we’re keeping those bank closings “in perspective.” – Doug Bedell

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