The banking industry, despite brief drops in earnings as a result of the mortgage crisis, continues to maintain strength, banking and savings and loan institution regulators say, according to report by the Associated Press.
“The vast majority of institutions remain well-capitalized,” Federal Deposit Insurance Corporation Chairman Sheila Blair told a Senate Banking Committee hearing on the state of the banking industry, according to AP. She added that credit losses “are going to continue to tick up,” and the FDIC expects increases in its troubled-bank list.
“I think we’ll still be easily within historical norms,” she said, noting that at the end of 2007, there were 76 institutions on the FDIC’s problem list, compared to 1,430 at the end of 1991. “I don’t think it will be anything we can’t handle.”
Moreover, Donald Kohn, vice chairman of the Board of Governors of the Federal Reserve System, said that preliminary figures showed bank holding companies had lost more than $8 billion in the fourth quarter of last year due to writedowns and loan losses, according to AP. “The U.S. banking system is facing some challenges, but remains in sound overall condition, having entered the period of recent financial turmoil with solid capital and strong earnings.”