Restoring banking's safety net: deposit insurance's steeper cost

A recession now in its 21st month has presented tremendous challenges to the deposit insurance system. Actual and expected bank failures have left the Deposit Insurance Fund below its mandated level. The Federal Deposit Insurance Corporation has responded by raising the premiums banks pay. Premiums will rise for banks in the Dallas-based Eleventh Federal Reserve District--but not by as much as they will for banks in the rest of the country. This additional cost is an important consideration because every dollar spent on insurance is a dollar that can't be lent or otherwise invested.Deposit insurance ; Federal Deposit Insurance Corporation ; Bank failures

District banks' exposure to modified loans limited

Banks in the Eleventh Federal Reserve District are performing better than their peers. However, signs of strain are still evident following the recession and financial market crisis. Some banks that restructure troubled loans by granting borrowers easier terms subsequently find the loans delinquent again. ; While the number of restructured loans has grown dramatically, these loans remain a small part of the average bank's balance sheet, a review of district data shows. Lenders here are less likely to carry restructured loans than banks around the country, and when they do hold such assets, problems don't appear to be out of line with historical tendencies. These findings indicate that the current experience with loan restructurings in the district is less a cause for alarm and more a helpful response to some borrowers' difficulties.Federal Reserve District, 11th ; Banks and banking ; Mortgage loans

Is Texas overbanked?

Texans taking to the roads are almost guaranteed to come across three things: a place to eat, a place to buy gas and a place to bank. Seemingly ubiquitous in the modern Texas landscape, banks are both a source and a sign of the state's robust economy. In small towns and large cities, community banks compete for business with each other, with savings banks and credit unions and with the largest commercial banks in the world. ; Banks competing to offer the best service at the best price is essential to the health of local economies. With too little competition, monopoly characteristics can creep into banking markets, driving up costs for consumers. On the other hand, too many banks in a market may mean some institutions don't have enough business to support their overhead, making them less efficient. ; So where do Texas banks and banking markets fall on this spectrum? A good way to answer that question is to compare the availability of banking services in Texas with availability in other parts of the country. ; Bankers sometimes worry Texas is overbanked. The concept is somewhat subjective, so finding a conclusive empirical answer can be problematic. However, data show that Texas ranks among the relatively less banked states, based on several measures, although it generally has greater banking services availability than California, a similarly sized state. The same conclusion holds when Texas metropolitan areas are compared with like-sized regions in other states.Banks and banking - Texas ; Competition

Banking on Basel : an alternative for capital requirements

Equity capital represents a bank’s net worth—the difference between its assets and liabilities. Put another way, it’s the value of assets financed by the bank’s owners, rather than depositors or other sources of funds. Capital serves as a buffer to absorb losses and prevent failures and figures prominently in the banking industry’s ability to lend.Equity ; Asset pricing ; Liabilities (Accounting) ; Capital ; Risk ; Basel capital accord

Evaluating the productive efficiency and performance of U.S. commercial banks

This paper reviews various approaches to the measurement of core inflation that have been proposed in recent years. The objective is to determine whether the European Central Bank (ECB) should pay special attention to one or other of these measures in assessing inflation developments in the euro area. I put particular emphasis on the conceptual and practical problems that arise in the measurement of core inflation, and propose some criteria that could be used by the ECB to choose a core inflation measure.Banks and banking