US credit crisis is ‘far from over’
WASHINGTON: Troubled loans keep rising and United States banks will need to shore up their reserves to cover potential losses for the next several quarters, a top US bank regulator said.
‘You simply must accept that the credit downturn is far from over,’ Federal Deposit Insurance Corp (FDIC) chairman Sheila Bair told a banking group on Thursday in Florida, where the housing market has taken a dramatic downturn.
She urged banks, ‘especially here in Florida’ to strengthen reserves. ‘It’s a tough slog but there’s no easy way out.’
Banks have been piling up reserves to cope with credit losses from mortgage defaults and troubled commercial real estate lending activities.
Ten FDIC-insured banks have failed this year, including IndyMac.
Ms Bair expects more failures but said the FDIC’s US$45 billion (S$64 billion) insurance fund, that covers up to US$100,000 per deposit and up to US$250,000 per retirement account, was strong enough to cope. - REUTERS
Source : Straits Times - 6 Sept 2008
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