FDIC casts vote of confidence in banks

Despite being in the midst of a credit crunch, the regulators believes the banking industry is in strong shape going forward according to published reports. During a Senate Banking Committee hearing on the state of the banking industry Federal Deposit Insurance Corporation chairperson Sheila Bair said most financial institutions remain well capitalized despite an expected rise in credit losses. Ms. Blair noted in the hearing that at the end of last year there were 76 banking institutions on the FDIC’s “problem” list compared with 1,430 at the end of 1991. Donald Kohn, vice chairman for the Board of Governors of the Federal Reserve System, said that while the U.S banking system faces some challenges it “remains in sound overall condition” according to published reports. The encouraging words by regulators came in the wake of the FDIC announcing that it would seek to rehire 25 of its own retired members in preparation for potential failing financial institutions due to growing market volatility (InvestmentNews, Feb. 26).