Troubled Real Estate Loans Force Banks to Set Aside a Record $37+ Billion
The Federal Deposit Insurance (FDIC) said Thursday that troubled real estate loans forced U.S. banks to boost loan loss provisions to a record $37.1 billion in the first quarter of 2008, compared to $9.2 billion in the year-ago period.
Additionally, the number of problem banks rose to 90, up from 76 at the end of 2007, the FDIC said in its quarterly industry update.
The FDIC, which insures customer deposits at banks, also revised fourth-quarter earnings to $646 million from $5.8 billion, dipping to a quarterly level not seen since the last quarter of 1990. In the first quarter of 2008, U.S. banks earned $19.3 billion, it said.
"While we may be past the worst of the turmoil in financial markets, we're still in the early stages of the traditional credit crisis you typically see during an economic downturn," FDIC Chairman Sheila Bair said in a statement.
Published on May 29, 2008
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