FDIC Shuts Two More Banks 25

recessionSome of the hits from the housing crisis are still plaguing us today. Try as we’d like to forget about the major bump we endured it’s hard to avoid the after-effects. They just tend to come to us through roundabout means. Here’s a prime example from this past weekend.

Two banks, one in Illinois and another in Florida, shut down their operations. They were listed previously as “under-capitalized” and were hit hard by bad loans and crashing securities investments. In other words, typical issues from 2008.

These two banks aren’t alone. The total this year is 11 shuttered banks. These two alone cost the FDIC about $60 million. That’s not huge compared to previous years but it’s still a decent junk this far along.

What does all this mean? If enough banks close are we going to hit a recession again? Tighter lending practices? Etc. etc.

The truth is it all depends. Other banks or the Fed could get jumpy and start trying to rein things in. Or they could realize this is just the last of the recession clawing at us trying to slow down our growth and recovery. It’s a vicious cycle.

But I see definite signs that the economy is going to withstand these slight setbacks. We’re not as naive as we used to be and we’re able to see through these problems. Not that they should be ignored. But we’ve learned enough to know that you don’t fight recessions with slowed growth. It just doesn’t make sense.

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