February 26, 2009: FDIC: Insured Banks and Thrifts Lose $26.2 Billion in Fourth Quarter 2008

According to the Federal Deposit Insurance Corporation (FDIC), banks and thrifts issued reports of a fourth quarter 2008 net loss totaling $26.2 billion as well as a $27.8 billion decline from the $575 million earned in fourth quarter 2007; it is the first quarterly loss since 1990. Rising loan-loss provisions, losses from trading activities, and goodwill write-downs also contributed to the loss as banks continue to repair their balance sheets in order to return to future profitability. While more than two-thirds of all insured institutions were profitable, earnings were diluted by large losses at a number of big banks. “Public confidence in the banking system and deposit insurance is demonstrated by the increase in domestic deposits during the fourth quarter,” FDIC Chairman Sheila Bair says. “Clearly, people see an FDIC-insured account as a safe haven for their money in difficult times.” FDIC-insured lenders reported net income of $16.1 billion in 2008, down from $100 billion in 2007 and the lowest since the $11.3 billion reported in 1990, the agency says. Regulators shuttered 25 banks last year, including Washington Mutual Inc., the biggest bank failure in US history. Regulators have so far seized 14 lenders this year, including eight in February. [Bloomberg, 2/26/2009; Federal Deposit Insurance Corporation, 2/26/2009; FDIC News and Events, 2/26/2009, pp. Press Releases]