FDICIA after Five Years: A Review and Evaluation
George J. Benston, George G. Kaufman
At year-end 1990, U.S. banking was in its worst shape since 1933. Some 1,150 commercial and savings banks had failed since yearend 1983, almost double the number of failures since the introduction of the FDIC in 1934 up through 1983 and equal to 8 percent of the industry at yearend 1980. Another 1,500 banks were on the FDIC’s problem bank list (rated in the lowest two examination categories). Some 600 banks which held 25 percent of the industry’s assets (although only 5 percent of the number of banks) reported book-value capital of less than 4 percent of their on-balance-sheet assets. These banks would have been classified as undercapitalized by the regulations that were adopted in 1991.
