Better Times Ahead for Banks and Depositors in 2012
During the financial crisis of 2008 and the two years after many banks failed, in fact a record number of banks failed during that time. The good news for 2011 and 2012 is fewer banks are expected to fail. Banks are in a lot better position then they were back in 2008.
Banks are well capitalized, the capital requires were raised after the financial crisis, and banks have been earning money again thanks to a zero percent interested offered by the Federal Reserve and investing that money in U.S. Treasuries.
The Federal Deposit Insurance Corporation (FDIC) released a quarterly report on the number of problem banks and the number of banks is at the smallest point in the past several years. The FDIC doesn't list the names of the bank which should just create a "run on" those banks and they would be sure to fail.
The Texas Ratio is a way to figure out which banks are in trouble, you can read about it here: Texas Ratio Bank List. The number of bank failures for the first half of 2011 is down to 48 banks, last year the first half saw the number of banks failed at 86.
Another problem during and after the financial crisis is banks weren't lending money. They needed to raise their capital levels and they raised lending requirements making it almost impossible for small business and home owners borrow money. The good news is lending increased almost $65 billion in the second quarter of 2011.
Where is the good news for depositors you ask? Well the economy is on the mend so that should drive CD rates and savings account rates higher in 2012. If the economy falls back into a recession these current low deposit rates that we are seeing will stay low for a couple of more years.
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