More Pressure on the Banks

With recent bank closings erasing 17 percent of the FDIC reserves and more closing coming in the near future, FDIC rates to the banks are going to need to be increased. Banks have cut off income producing lines by restricting borrowing to only the most credit worthy. At least two top ten banks are on the edge of takeover. The shakiness of the entire system will take its toll on the small banks whose margins are thin but sound. Small town banks that blanket the middle of the country will have to tighten credit in order to keep within fed guidelines. Punishing the small creditworthy banks for the greediness of CEO’s is not what the FDIC insurance was set up for. They should be going after the multi-million dollar bonuses paid to the CEO’s and others during the last 5 years. They should be the ones held accountable.

http://www.bloomberg.com/apps/news?pid=20601087&sid=abahg9z7p4wU&refer=worldwide