The Back Alley Archives

Aug. 26 (Bloomberg) -- The U.S. Federal Deposit Insurance Corp. said its ``problem list'' of banks increased 30 percent in the second quarter to the highest total in five years.

The list had 117 ``problem'' banks as of June 30, up from 90 in the first quarter and the highest since mid 2003, the agency said today in its quarterly report released in Washington. FDIC-insured lenders reported net income of $4.96 billion, down from $36.8 billion in the same quarter a year ago.

``Quite frankly, the results were pretty dismal, and we don't see a return to the high earnings levels of previous years any time soon,'' FDIC Chairman Sheila Bair said at a news conference.

The largest banks and securities firms have announced more than $500 billion in asset writedowns and credit losses since 2007 linked to declines in mortgage-backed securities.

WASHINGTON, Aug 26 (Reuters) - A U.S. banking regulator said the failure of mortgage lender IndyMac Bancorp Inc will deliver a bigger blow to its insured deposit fund than originally expected.

The Federal Deposit Insurance Corp said on Tuesday it now expects IndyMac's failure in July to cost its insurance fund $8.9 billion, compared with the previous expected range of $4 billion to $8 billion.

The FDIC also said during its quarterly bank briefing that it will soon start widely marketing IndyMac's assets.

"We hope to market it certainly in the third quarter," FDIC Chairman Sheila Bair told a news conference. "I think we're going to be marketing it both as a whole bank as well as in pieces."

Nine U.S. banks have failed this year, including IndyMac, which became the third-largest U.S. bank failure ever. It was one of the 117 problem banks on the FDIC's second-quarter watch list of institutions with financial, operational or managerial weakness that threaten their financial viability.

IndyMac accounted for $32 billion of the combined $78 billion in assets of problem banks on the FDIC's watch list.

The FDIC said its Deposit Insurance Fund fell in the second quarter to $45.2 billion, down from $52.8 billion at the end of the first quarter, due to an increase in bank failures.