More banks have failed in 2010 (157) than in any other year since 1992 during the savings and loans crisis according to the Federal Deposit Insurance Corporation. The number of bank closures was 0 in 2006 and 147 in 2009. Although many experts believe the economy is on the rise more financial institutions are predicted to close in 2011. The number of banks on the FDIC’s troubled list was 860 in September 2010 and typically about 20% of these banks end up closing. The troubled financial institutions on this list consist mainly of community banks that would not be considered “too big to fail.” The bad loans that plagued these banks were mostly commercial real estate loans, which are much different that the home mortgage loans that bankrupted many banking giants.

The FDIC insurance fund is currently operating in the red and has a bank deposit balance of negative $8 billion; however FDIC feels that it will be financially sound through 2014 because the negative $8 billion does not include reserves and pre-paid premiums from the banking industry.
As the year ends, 2010 should be the high mark for bank closures and in 2011 FDIC feels there will be fewer total closures and banking consultant Bert Ely says “I think we’re over the hump of the problem but far from the end.”

Depending on your experience, the feeling you have on the current banking situation may or may not be positive. Some people believe we are headed for another bubble burst but only time will tell if we are completely out of the woods but at least for now the news looks positive.