More Bank Failures on the Way in 2009?

Financial analysts, in their infinite wisdom (we hope) about the workings and trappings of the economy, have predicted that there will be more bank failures this coming year. Just when we thought we may have been out of the woods when it comes to our banks failing in the US, we may be putting more and more pressure on the FDIC, which is the institution set up by the US government after the Great Depression to insure people’s deposits up to $100,000.00 after many lost their life savings.

There is also whispering about the fact that there may be an increase in the limit to the amount of money that is able to be insured by the FDIC, since many are jittery about deposits that are over $100,000 being covered in these uncertain economic times.

We tend to think that banks are infallible, but the fact is that although banks do have money coming in every day through loans and deposits and various other instruments of investment, they are still susceptible when the amount of defaults goes up significantly.

The problem is that with the increasing numbers of subprime loans being defaulted, banks had more money out in bad loans than they had coming in, hence the problems that are being widely reported as of late.

Analysts are saying that it’s almost certain we will see more bank failures in the year to come, it’s just a question of how they will go down, whether they will be bailed out by the government or they will be bought out by other banks that are looking to make an investment for the future.

Even with the passing of the provisioned massive 700 billion dollar bailout, which by the way, the government may end up making money on in the very distant future contrary to many thoughts that we as taxpayers are throwing down a hole, there will still most likely be more bank failures to come unfortunately, it’s just a matter of when where and why, and how they will be bailed out.