US Banks and Thrifts See Lowest Earnings in 16 Years

Income of government-insured U.S. banks and savings institutions fell by 27.4 percent during 2007, according to the Federal Deposit Insurance Corporation (FDIC).

The banks and thrifts reported a combined net income of $105.5 billion in 2007, a decline of $39.8 billion from 2006, and the lowest in the last 16 years.

The decline, which ended a string of six consecutive years of record earnings for the banking and credit industry, was blamed mainly on weakness in residential mortgage and construction loans, and sharply lower trading revenue.

"Weakness in the housing sector and the credit squeeze in financial markets made it a very challenging time for many institutions," said FDIC Chairman Sheila C. Bair in a press release. "And we can expect these problems to continue in 2008."

On the not-quite-so-dark side, Blair noted that most of the nation’s banks and lending institutions "are so far successfully coping with the challenges they face."

Unfortunately, the same cannot be said for many of their customers, as the nationwide rate of home foreclosures increased by 75 percent during 2007.

Also See:
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Foreclosure Rate Double That of a Year Ago (US Economy)