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The US banking system will lose some 1,000 institutions over the next two years, said John Kanas, whose private equity firm bought BankUnited of Florida in May.
“We’ve already lost 81 this year,” Kanas told CNBC. “The numbers are climbing every day. Many of these institutions nobody’s ever heard of. They're smaller companies.”
“Government money has propped up the very large institutions as a result of the stimulus package,” he said. “There’s really very little lifeline available for the small institutions that are suffering.”
www.econreview.com...
The impacts of the pressures on banks are apparent in simple counts of the numbers of banks. In the early years of the Depression, banks with loans to investors in the stock market were immediately at risk. Bank runs compounded these problems even for apparently healthy banks. Of the more than 25,000 banks in business in 1929, fewer than 15,000 survived to 1933.
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The collapse in the banking sector precipitated a parallel contraction in the money supply. A severe contraction in the money supply, whether as a result of a policy or as a result of bank failures, then leads to a severe contraction in economic activity.