FOR IMMEDIATE RELEASE CONTACT: Doug Gordon, 202-822-5200
DATE: October 26, 2009
AFR: 100th Bank Failure Glaring Reminder To Congress
That It Is Time To Act On Real Reform
Washington, DC– Americans for Financial Reform released the following statement today in response to the 100th bank failure over the weekend:
Heather Booth, Director, Americans for Financial Reform: The financial crisis in the United States reached an ominous milestone this weekend, with the 100th bank failure of the year. This milestone must serve as a glaring reminder to Congress, more than a year of after the financial crisis began, that is more than past time to act on real reform.
Bank failures continue to rise – there were 25 failures for all of 2008 and only three in 2007. The Federal Deposit Insurance Corporation estimates that another 416 banks are at high risk of failure. This years closures have cost FDIC’s insurance deposit fund approximately $850 million. The FDIC expects as much as $70 billion in losses due to failed banks over the next five years.
The accelerating pace of bank failures makes clear that financial regulatory reform designed to curtail problems now, and prevent ones from arising in the future, remains an urgent national policy priority.
Some see promising signs in the recent run-up in stock prices. In fact, however, other signs are pointing to a long and worsening crisis. Job losses in September jumped by 90,000 the first time that’s happened in seven months. The unemployment rate rose to 9.8%. A new wave of banks and non-bank lenders are now declaring losses from defaulting subprime mortgage and other consumer credit activities.
Plus, a surge in losses in commercial mortgage-back securities is coming. Already, vacancies have risen dramatically in apartments, office buildings, retail and industrial properties. Unless we deal more aggressively with foreclosures there will be more bank failures.
No one should be lulled into complacency and think the crisis was a year ago. It is today. And action is needed now.
We need financial reform that will to protect consumers, small business and lenders who play by the rules. We need a consumer financial protection agency, we need to bring all the “shadow markets” into the light (including that derivatives are traded openly on exchanges), we need systemic risk regulation that is transparent, accountable and democratic and more dramatic steps to stem foreclosures. Wall Street is organizing to protect the status quo that got us into this crisis. Three major banking associations have spent $8.9 million on more than 140 lobbyists in the first 6 months of this year to defeat reform. The Chamber of Commerce is spending $2 million on its ad campaign to defeat the Consumer Financial Protection Agency.
People will need to organize so that reforms address the real problems.
Now is the time for action. We cannot afford to wait any longer.