Weiss Ratings: More than 2,000 Banks are Weak
May 28, 2010
The latest bank ratings from Weiss Ratings in Jupiter, Fla., provides a reminder for consumers to choose their banks carefully and make sure their deposits, including CDs, money market accounts, and savings accounts, are within FDIC insurance limits.
Almost two years after the $700 billion federal bailout of large banks, Weiss Ratings said this week that thousands of banks remain vulnerable to financial difficulties and even possible failure based on statistical analyses of their capital, asset quality, earnings, and other factors.
Of the 8,000 US banks and savings and loans it rates, Weiss says 2,259 institutions controlling $5.8 trillion, or almost 44% of the industry's assets, are considered vulnerable, rating a weak or lower rating, while only 962 institutions with $484 billion or 3.7% of the industry's assets are viewed as strong enough to merit a good or higher rating.
Failed Bank Toll Rises
So far, 73 banks have failed in 2010, more than double last year's pace. Weiss Ratings chairman Martin D. Weiss predicted the pattern will continue when further loan deterioration and regulatory reform take their toll.
Some of the strongest banks are relatively small with few branches, while many of the biggest banks in the country are weak, according to Weiss, which is providing its list of strongest and weakest banks free to consumers who provide their email address on its website.
Last week, the FDIC reported it raised its estimate of troubled institutions to 775 as of March 31 from 702 at the end of last year, the highest in almost seven years, but the increase in the number of problem banks was the smallest in four quarters. FDIC chairwoman Sheila Bair noted that the vast majority of problem institutions don't fail.
FDIC insurance limits are $250,000 per person per financial institution until January 1, 2014, when the limit will revert to $100,000 per depositor.
