In Crazy New Landscape For Banks, Taxpayers Are The Big Losers

[AllentownJake]

Fifty banks collapsed during the third quarter of 2009, while more than one in 15 are on the verge of failure -- the highest rate since 1992 -- according to a new report from the Federal Deposit Insurance Corporation that depicts a crazy new landscape for banking in which taxpayers are the consistent losers.

Because of all the failure and near failures, the fund that guarantees deposits hit the red for the first time since 1992.

Meanwhile, some banks are making money hand over fist, with the sector as a whole posting $2.8 billion in profits -- up from a $4.3 billion loss in the second quarter.

They're doing so in part by borrowing cheap federal money -- subsidized by the American taxpayer -- even while massively cutting back on lending. The plunge in lending since last quarter is the largest recorded since federal regulators began keeping track in 1984.

The whole point of the taxpayer-funded bailout and the cheap money for banks was to recapitalize them in hopes of stimulating lending, but the banks are holding back -- which is seriously slowing the economic recovery.

http://www.huffingtonpost.com/2009/11/24/in-crazy-new-landscape-fo_n_369177.html