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FDIC's Bair: Banks More Stable, but Failures to Continue

Banks have stabilized since the collapse of Lehman Brothers one year ago, but failures will continue at a "good clip" for the rest of 2009, FDIC Chairman Sheila Bair told CNBC Tuesday.

FDIC Chairman Sheila Bair
AP
FDIC Chairman Sheila Bair

"We still have some challenges to work through in the banking sector, but we have time and we can do that in a methodical way," she said.

Bair said the FDIC has about $42 billion in total reserves, with $32 billion designated to cover projected losses over next 12 months.

But the agency has already taken over 92 banks this year, causing some to worry it will need to borrow additional funds from the Treasury.

"I never say 'never,' but we have a variety of tools that are available," including borrowing from the banking industry itself, she said.

On the topic of big banks, Bair said she supports the notion of additional capital requirements, and that the government needs to create an exit strategy for banks that have been dubbed "too big to fail".

"If investors and creditors think the government's always going to step in and take the downsides so they only have the upside, that fosters additonal risk taking," she said.