Is banking going to go bankrupt in America?
The banking system in the United States has been on the verge of collapse for some time now. It's not a new topic, but it's one that has many people concerned. If you're one of them, you might be asking yourself: will my bank fail?
Understanding Banking Failure
Banks have been consolidating into bigger and bigger entities. The FDIC (Federal Deposit Insurance Corporation) is an independent government agency created by Congress in 1933 to maintain stability and public confidence in the nation's financial system by insuring deposits. Its mission is to maintain public confidence in the U.S. banking system by protecting depositors' funds through bank deposit insurance and resolving failed insured banks without taxpayer loss.
In 1995 there were over 18,000 commercial banks, but in 2013 there were just over 6,200 banks. The number of total bank failures since 2010 has been 611, and it's predicted to hit 800 this year. The trend seems clear: with fewer large banks dominating the industry, there's a greater chance that those big banks will fall during an economic crisis and affect more people than ever before.
Japan’s Financial System
We'll never know for sure, but there are a lot of worries that our banking system is headed in the same direction as Japan's. The Japanese economy has been struggling with deflation for nearly two decades now, and their banks are full of bad debt. But the problems of Japan's financial system aren't completely negative.
For one thing, the real estate market has been going strong in Japan for years despite low-interest rates. Also, people who have used credit cards to finance big purchases have been able to pay them off much more easily thanks to the deflation. That said, it's hard to say what would happen if we had a massive banking crisis like Japan did.
If you have any questions, you can get a free consultation with Ascent Law LLC:
Ascent Law LLC:
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