NEWS RELEASE 2007
ABA Media Contact: John Hall
(202) 663-5473
E-mail: jhall@aba.com

ABA STATEMENT ON FDIC EARNINGS REPORT

by James Chessen, ABA chief economist

            “Today’s news from the FDIC confirms what we’ve known – banks are adjusting to the economic stress in the housing market and are taking the necessary steps to put the losses behind them.  This will be an ongoing process, but because the health of the industry has been so strong for so long, banks have the capital and reserves to weather this storm (see related charts). 

            Banks have $1.3 trillion in capital and another $87 billion in reserves set aside to cover potential losses from problem loans.  In fact, these reserves were 105 percent of problem loans, meaning that banks could write off all of these loans and still have reserves left over. 

            With $8.2 trillion in deposits, banks have plenty of resources to continue meeting the lending needs in their communities.  In fact, many people are turning to banks to help refinance existing mortgages or to consolidate other forms of debt.  Businesses are also rediscovering that the local bank is the best source of funding when investors get shy about providing direct funding.

            Our diversified industry of more than 8,500 banks with 97,000 locations nationwide stands ready to serve customers.  The vast majority of banks have been in existence for decades and plan to serve their customers for many, many more.

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The American Bankers Association, on behalf of the more than two million men and women who work in the nation's banks, brings together all categories of banking institutions to best represent the interests of this rapidly changing industry.  Its membership-which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks-makes ABA the largest banking trade association in the country.