U.S. Could See More Bank Collapses
- Apr 23, 2008
Washington, D.C.–U.S. bank failures could spiral higher than historical records due to poorly underwritten loans, according to John Dugan, who oversees about 1,700 national banks as comptroller of the currency.Dugan said that for the four years prior to the current lender situation, nearly no institution regulated by his agency had collapsed, the Financial Times reports.“We’re going to have some more bank failures that will come back more to historical norms and may go above that with time,” he told the Times. “That is a natural consequence of the economy going from historically exceptionally benign credit conditions to something that is more normal to something you would get in a downturn.”Atlanta-based SunTrust said this week that its profit dropped by nearly half to $283.6 million as provisions increased to $560 million. Profits at Ohio’s Fifth Third bank declined 19 percent to $292 million, and provisions grew from $84 million in 2007 to to $544 million.Some of the biggest U.S. banks–such as Citigroup and Bank of America–have also seen losses from loans grow as more consumers default on home equity, credit card and auto loans.