Economy

US Banking Industry Had No Failures In 2018

US Banking Industry Had No Failures in 2018

U.S. banks had something to cheer about in 2018: Not one bank went under, putting a spotlight on the strength of the banking market.

According to a report in CNBC, citing Calculated Risk, last year was the first time since 2006 that not one U.S. bank failed during the year, and the third time since the Federal Deposit Insurance Corp. (FDIC) was founded in 1933 that an entire year went by without a bank going under. The reasons: economic expansion, President Donald Trump’s corporate tax changes and regulations put in place after the recession that are improving the risk at banks.

Citing Bloomberg, CNBC noted that the largest U.S. banks are expected to have profit of more than $100 billion, which would be a record. And it’s not just the big banks that are benefiting: Among smaller banks and those that are most vulnerable to failure, just eight of them failed in 2017. All of the failed banks were bought by bigger banks, noted the report. If a bank fails, the regulator looks to sell the assets to another bank and the FDIC assumes responsibility for the remaining assets.

CNBC noted that failing banks happened more often in years past, with 2010 being a record year with the failure of 157 institutions. In 1989, during the savings and loan crisis, 534 banks failed.

At the same time that the big banks are booming and making record profits, they are trying to help those less fortunate, such as the government workers who haven’t received a paycheck since the government shutdown. Last week, some banks announced different actions to mitigate the financial impact. For instance, JPMorgan Chase has waived all fees on checking accounts, including overdraft charges, for customers who no longer receive a government check directly deposited into their bank account. The bank also said it will help government workers who could miss a payment on a car, credit card or mortgage. Meanwhile, Marcus by Goldman Sachs said it could provide loan payment deferrals.

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