Regulators have shut down a small bank in Georgia, lifting to 104 the number of U.S. banks to fail this year as the industry has struggled to cope with mounting loan defaults and recession.
The Federal Deposit Insurance Corp. on Friday took over NorthWest Bank and Trust, based in Acworth, Ga., with $167.7 million in assets. . . .
The failure of NorthWest Bank and Trust is expected to cost the deposit insurance fund $39.8 million.
Given evidence that we’re now entering another slowdown, it’s very likely we’ll reach 180 bank failures by the end of the year.
UPDATE: The Atlanta Journal-Constitution reports that “41 Georgia banks . . . have collapsed since August 2008, the most in any state,” and more Georgia banks are on the FDIC’s regulatory action list.
UPDATE II: Let’s just go ahead and round up the economic gloom here. July was the best month for the Dow Jones Industrial Average in the past year — posting a net gain of more than 700 points — but the DJIA gave back about 75 points in the last two days of the month, indicating lingering doubt about future prospects. The New York Times was forced to confront the reality:
There is no more disputing it: the economic recovery in the United States has indeed slowed.
The nation’s economy has been growing for a year, with few new jobs to show for it. Now, with growth at an annual rate of 2.4 percent in the second quarter and federal stimulus measures fading, the jobs outlook appears even more discouraging.
Note that the NYT clings stubbornly to the assumption that what we’ve been experiencing is a “recovery.” As I’ve been saying since last summer, this is a dead-cat bounce. The financial crisis of fall 2008 knocked the economy down so far that quarter-to-quarter growth was practically inevitable at some point. Pump in a few trillion dollars of deficit-funded stimulus action and, yeah, you could generate the artificial appearance of a “recovery,” but (a) employers still aren’t hiring enough to offset the job losses, and (b) now the stimulus is running out, as the Times explains:
Fiscal stimulus policies are also expiring, which may further drag on growth. And individual stimulus programs like expanded unemployment benefits have faced huge political battles each time they have come up for extension in Congress.
The approaching midterm elections may further entrench the political stalemate after Congress returns from its August recess. As a result, pressure will probably increase on the Federal Reserve to use its tools to prevent a double-dip recession. Recent reports from Fed officials suggest the central bank has become increasingly worried about where the economy is headed.
Wait a minute — did somebody say the magic words? Oh, yes. Yes, indeedy!
Double-dip feared as US economic growth loses pace
. . . The second-quarter slowdown led economists to question whether the US might be poised to enter a period of negative growth later in the year, leading to a much-feared double-dip recession. The Dow Jones fell sharply after the release of the GDP data before recovering ground to settle down 40.72 at 10,426.44 in lunchtime trading.
“The post-recession rebound is history,” said Bart van Ark, chief economist for the Conference Board, an economic think-tank. . . .
“The prospects of a double-dip or some facsimile thereof were bolstered… by the contours of the second-quarter GDP report,” said David Rosenberg, chief economist at Gluskin Shef.
Everybody repeat after me: It Won’t Work!
UPDATE III: King Banaian has some technical analysis of the GDP report at Hot Air Green Room. The bottom line is that the housing sector, which caused the 2008 crisis, is still nowhere near the point at which it will be generating job growth. And if housing employment doesn’t recover, we’ll still be above 9% unemployment indefinitely.