81 Bank Failures...And Surging

Real Estate Broker/Owner

On July 3rd, more than half-way through the year, I wrote a post that the number oif bank failures had reached 52.  Now here we are, less than two months later and that number has exploded to 81.  We have had nearly 30 bank failures in less than two months.  That is a pace of nearly one every other day.

The most notable of the bank failures this weekend was Guaranty Bank, it was the third largest this year.

The systemic cause of these failures is falling asset prices, specifically residential and commercial real estate.  The problem is that despite aggressive monetary efforts by the government, asset values are still falling.   

Monetary policy is not working because it is not targeted, it is not timely, and it is anything but temporary.  Monetary policy is broad, slow, and long-lasting.  And yet despite the impotence of monetary policy, Washington continues to step on the gas. 

On the other hand, fiscal policy is cost-effective, timely, targeted, and temporary, and yet despite this, Washington continues to ignore it and is allowing asset values to continue to deteriorate.        

Comments (5)

David Saks
(retired) - Memphis, TN

The news surfacing regarding commercial default is causing fear, dread and terror for some, Mark. The networks and business journals are ploughing it for everything they can. Keep the sunny side up ! :-)

Aug 23, 2009 09:23 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Mark, I think we've only seen about 25% of the bank failures. There are currently about 350 on the troubled bank list.

Aug 23, 2009 10:55 AM
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

If the government spent the bailout monies on the problem that caused them instead of trying to institute their own socialist agenda of buying votes, and spreading our wealth this problem would have been fixed by now.  Instead, they used this as a power grab.

Aug 24, 2009 01:17 AM
John Walters
Frank Rubi Real Estate - Slidell, LA
Licensed in Louisiana

Mark I have to agree with Jim.  This about taking over not fixing any of the problems.

Aug 24, 2009 06:23 AM
Eric Murrietta
Homeowners Financial Group USA, LLC - Scottsdale, AZ

It's unfortunate that bank after bank continue to fail and that it is only a matter of days before the next one should fail.  I guess fixing the problem is too big of a task, we will let only the strong survive.

Aug 25, 2009 04:50 AM