Monday, January 17, 2011

Texas bank crisis not over yet

This story is a composite of versions published in the various zones.
The darkest days of the Texas banking crisis appear to be at an end, but difficult times still lie ahead in 1990 and beyond for many banks as they struggle to compete in the state's weakened economy, analysts and regulators say.
Those few banks that have been recapitalized with federal assistance are likely to prosper next year, but many smaller banks will fail as the effects of an economic collapse that began in the mid-1980s linger, the experts said.
A record 134 banks went out of business in Texas in 1989-out of 203 bank failures nationwide-and another 70 to 90 will go under in 1990, said Steve Scurlock, deputy commissioner for the Texas Department of Banking.
"The state system has seen its darkest days. But there will not be a tremendous amount of sunlight next year or the year after that," Scurlock said.
Before the economic collapse, which started in the mid-1980s and greatly accelerated when oil prices fell to $10 a barrel in 1986, the state had about 1,900 banks.
Today, there are about 1,400, Scurlock said.
Concomitant with the decline in banks has been a fall in banking assets from $220 billion in 1986 to $180 billion today, he said.
That drop translates into diminished economic activity, Scurlock said. "When you have fewer assets, that obviously corresponds to fewer loans," he said.
Nine of the state's 10 largest banking firms have been recapitalized with federal assistance or merged with other banks.
The failures predicted to occur in the future will be smaller, independent banks for whom the Federal Deposit Insurance Corp.'s bailout program has been non-existent.

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