HISTORY OF BANK FAILURES

 

SOURCES OF INFORMATION ON BANK FAILURES

The Federal Deposit Insurance Corporation (FDIC) provides current and historical data and information on bank and thrift failures.


BANK & THRIFT FAILURES - OVERVIEW OF KEY TIME PERIODS

Bank and thrift failures have been a "normal" element of banking but there have been several noteworthy periods that distinguish the "normal" bank or thrift failure from those associated with a banking industry crisis.

There have been three major periods of bank and thrift failures since the Great Depression:

  1. Great Depression to World War II (WW II)

  2. Farm Crisis of 1980’s

  3. National Thrift / Oil Sector Banking and Thrift Crisis

    • Thrift Crisis (National)

    • Oil Sector Bank & Thrift Crisis

    • R.T.C. Resolution Activity

  4. Great Recession

There have been several drivers related to these failures, including:

  • Commercial real estate

  • Residential real estate

  • Oil price collapse

  • Agriculture and farmland

There is not a direct link between bank & thrift failures and recessions. Recessions do not cause bank & thrift failures. And bank & thrift failures do not cause recessions.

Bank Failure Historical Timeline

Bank Failure Historical Timeline

Bank Failures and the Economic Cycle

Bank Failures and the Economic Cycle


BANK FAILURES - TIME ELAPSED BETWEEN FAILURES

Longest Elapsed Time Between Bank Failures

All streaks must come to an end. And this drought in bank failures ended May 31, 2019 with the failure of a $36 million Texas bank.

533 days elapsed from the last bank failure (12/15/2017). With the exception of the 952 day period from the last bank or thrift failure prior to the commencement of the Great Recession and the 527 failures that occurred during that period, we had not experienced such a long “drought” in bank and thrift failures since the late 1990’s.

Unusual? No.

Concerning? No.

There will be more bank failures, but more of the one off occurrence.


BANK & THRIFT FAILURES - RECENT HISTORY SINCE 1976

# of Bank and Thrift Failures by Year Since 1976

# of Bank and Thrift Failures by Year Since 1976

Total Deposits of Bank and Thrift Failures by Year Since 1976

Total Deposits of Bank and Thrift Failures by Year Since 1976

Bank and Thrift Failures Pre- and Post-1976

Bank and Thrift Failures Pre- and Post-1976

Top 15 States by # of Bank and Thrift Failures Since 1976

Top 15 States by # of Bank and Thrift Failures Since 1976


BANK & THRIFT FAILURES - SELECTED CRISIS PERIODS

Great Depression through WW II.

 Period: 1934 - 1945.

Recessions (Peak to Trough):

  • Q3 1929 to Q1 1933 (Great Depression)

  • Q2 1937 to Q2 1938

  • Q1 1945 to Q4 1945

Bank & Thrift Failures: 398

Total Deposits of Failed Institutions: $510 billion

Key Legislative Developments:

  • Federal Home Loan Bank Act (1932)

  • Banking Act - “Glass-Steagall” (1933)

  • Banking Act (1935)

 
 

FARM CRISIS 1980’s

 Period: 1934 - 1945.

Recessions (Peak to Trough):

  • Q3 1981 to Q4 1982

Bank & Thrift Failures: 141

Total Deposits of Failed Institutions: $2.5 billion

Key Legislative Developments:

 

SAVINGS AND LOAN / THRIFT CRISIS:

 Period: 1985 - 1993.

Recession (Peak to Trough):

  • Q3 1990 to Q1 1991

Bank & Thrift Failures: 912 thrifts

Total Deposits of Failed Institutions: $397 billion

Key Legislative Developments:

  • Depository Institutions Deregulation and Monetary Control Act (1980)

  • Garn-St. Germain Act (1982)

  • Competitive Equality Banking Act (1987)

  • Financial Institutions Reform, Recovery,and Enforcement (FIRREA) Act (1989)

  • FDIC Improvement Act (1991)

 

OIL SECTOR Banking & Thrift Crisis:

 Period: 1985 - 1993.

Recession (Peak to Trough):

  • Q3 1990 to Q1 1991

Bank & Thrift Failures: 929

Total Deposits of Failed Institutions: $148 billion

Key Legislative Developments:

  • Depository Institutions Deregulation and Monetary Control Act (1980)

  • Garn-St. Germain Act (1982)

  • Competitive Equality Banking Act (1987)

  • Financial Institutions Reform, Recovery,and Enforcement (FIRREA) Act (1989)

  • FDIC Improvement Act (1991)

 
 

RESOLUTION TRUST CORPORATION (RTC) activity DURING THRIFT CRISIS:

 Period: 1989 - 1995.

Recession (Peak to Trough):

  • Q3 1990 to Q1 1991

Bank & Thrift Failures: 747

Total Deposits of Failed Institutions: $316 billion

Key Legislative Developments:

  • Depository Institutions Deregulation and Monetary Control Act (1980)

  • Garn-St. Germain Act (1982)

  • Competitive Equality Banking Act (1987)

  • Financial Institutions Reform, Recovery,and Enforcement (FIRREA) Act (1989)

  • FDIC Improvement Act (1991)

 

GREAT RECESSION:

 Period: 2007 - 2017.

Recession (Peak to Trough):

  • Q4 2007 to Q2 2009

Bank & Thrift Failures: 527

Total Deposits of Failed Institutions: $489 billion

Key Legislative Developments:

  • Gramm-Leach-Bliley Act (1999) removed barriers to commercial bank, investment bank and insurance company mergers and other relationships.

  • Reigle-Neal Interstate Banking Act (1994) laid framework for nation-wide banking.

  • Emergency Economic Stabilization Act (2008)

  • The Housing and Economic Recovery Act (2008)

  • Federal Housing Finance Regulatory Reform Act (2008)