Smaller US banks could fail in their hundreds

by Gill Montia

Story link: Smaller US banks could fail in their hundreds

Insolvency firm, Begbies Traynor International, says it expects up to 300 smaller US banks to fail over the next three years.

The warning comes only days after Harvard economist, Professor Kenneth Rogoff, predicted that the credit crisis would not pass without at least one high profile collapse in the US.

The former head of the International Monetary Fund also revealed that he expects US mortgage institutions, Fannie Mae and Freddie Mac, to cease to exist in their present form.

Last week, Columbian Bank & Trust became the ninth regional US bank to fail this year.

The bank collapsed amid mounting bad debt and writedowns stemming from a fall in property prices.

Yesterday, the Federal Deposit Insurance Corporation reported that its list of troubled US banks has risen from 90 to 117.

The corporation guarantees customer deposits in US banks and its latest quarterly list of endangered banks is the longest since mid-2003.

Sheila Bair, who chairs the organisation, has warned that more banks will be coming onto the list as credit problems worsen.