Bailed-Out Banks Not Out of the Woods

Ninety-Eight banks that received TARP funds are still in trouble, based on their third quarter financial results. The number of troubled banks has risen from 96 the prior quarter. A 2 percent increase in the number of problematic banks may not sound like an impressive jump in risk — but it certainly isn't an improvement either.


This new data comes to us today from an analysis released by the Wall Street Journal.

And the takeaway point may be this: These numbers represent an important counter-narrative from the official line of cautious optimism.

For example FDIC, Chairwoman Sheila Bair's recent statements:

"The industry continues making progress in recovering from the financial crisis. Credit performance has been improving, and we remain cautiously optimistic about the outlook."

The WSJ report states that the 98 banks that "show signs they are in jeopardy of failing" have taken in a total of $4.2 billion in TARP funding.

The reasons cited by the study are precisely what you might expect: "eroding capital levels, a pileup of bad loans, and warnings from regulators".

Look for this story to get more pickup as Wall Street recovers from the weather tomorrow.


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