FDIC Predicts Record Bank Failures in l986

A record number of banks are expected to fail or require federal financial assistance by the end of the year, the chairman of the Federal Deposit Insurance Corp. said today.

L. William Seidman told a meeting of the United States League of Savings Institutions that between 140 and 160 banks will fall into the failed or help-needed category in 1986, up from last year’s record 120 that failed or needed assistance.

At the beginning of the year, Seidman had estimated that 120 banks would fail this year.

He said the mid-year adjustment reflects “the continuing increase in the number of institutions being added to the FDIC’s problem bank list and the actual number of failures so far this year.”

Bank failures and assistance transactions reached 55 by June 9, surpassing the 43 failures that occurred during the same period in 1985, he said.

Slightly more than 1,300 banks are on the FDIC’s problem bank list today, up from 1,140 at the end of 1985, Seidman added.

He said the increases in the number of problem banks reflect asset difficulties confronting oil and gas lenders, continuing weakness in the agricultural areas and softness in the commercial and real estate market.