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Zombie Bank Problems Have Not Ended

8/6/2013

 
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For those who are not familiar with Zombie Banks, the term originated with the savings and loan crisis of the 1980s and refers to financial institutions whose liabilities exceed their assets. If they were a normal business, they would be discussing the likelihood of bankruptcy proceedings with their attorneys. The most recent banking bailout in 2008 kept a number of these "bankrupt banks" operating instead of closing their doors. Some of these are big banks ("Too Big to Fail").

Based on the ongoing reports of Troubled Banks maintained by the Federal Deposit Insurance Corporation (FDIC), there is still a historically high number of problem banks in the United States. The FDIC does not have a separate reporting column for Zombie Banks, so in most cases we have to do our own detective work.

We do not really need to look at the FDIC Problem Bank report to know that there are still banking problems based on how most banks are lending and investing. Many banks have resumed investments in the super risky financial derivatives that led to the last financial crisis. It is still difficult for most small businesses to obtain what most would label as "normal" commercial financing and working capital loans. For individuals trying to buy a house, the foreclosure crisis is continuing to make it difficult to get real estate appraisals (for a mortgage) that are not distorted by using foreclosed properties in the property valuation process.

However it is still possible to get a credit card with annualized interest rates of 20% (and much higher in many cases). It is also now easier to get payday loans from several of the bigger banks. Payday lending programs make credit card rates look dirt cheap. It is common to see 300% to 600% as a standard practice payday loan.

Is this why taxpayers saved the banks?
------------------------------------------- A Few Words About Stephen Bush

Stephen Bush has provided specialized consulting and writing services to business and government clients for more than 30 years. He is well-known for his practical and persuasive writing. Steve's writing experience includes sales articles, white papers, business proposals, technical writing, business blogs and financial articles.

Steve is the founder and CEO of AEX Commercial Financing Group. He is a U.S. Navy veteran.

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Stephen Bush PlanBush
Always Have a Plan B — plan Bush

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Steve Bush is the CEO and Founder of AEX Commercial Financing Group.
Steve obtained his MBA from UCLA — he is a U.S. Navy veteran.
His internet screen names include
aexbush, bushaex and planBush.
Primary services: business writing and coaching.


Thinking Outside of the Blog

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