You know what day today is – it’s “FDIC Friday,” when the Federal Deposit Insurance Corporation (FDIC) will announce the latest US bank closures.
A typical FDIC Friday involves the FDIC revealing that a few community banks in what is (unkindly) known as “flyover country” must be shuttered.
In 2011, US community banks face several ongoing headaches. The most serious involves the damage done to the community bank sector by imprudent real estate development loans made at the height of the financial bubble. Such loans helped bring down many of the 157 US banks that closed in 2010.
There were two other sources of pain for the community bank sector in 2010 that are going to pose problems in 2011, too:
MSM Indifference: Unfortunately, small bank closures do not receive much in-depth MSM coverage. The best information one can get about bank closures usually comes from local media sources.
Thankfully, local reporters are sometimes fearless enough to interview dissident bank board members on how a particular bank could have been saved, instead of being closed down. Other times, these reporters do not shy away from naming the specific over-ambitious real estate developments that dealt the final blow to a bank’s balance sheet.
In 2011, the MSM ought to follow the lead of its small community newspaper brethren, and cover community bank failures with a similar attention to detail. And drop that "flyover country" prejudice against community banks, please.
Political Indifference: It’s hard to believe, but you hardly ever see a Governor, or a Senator, or a member of the House of Representatives comment in a news story on a community bank failure, even if it is only to express regret that the bank could not be saved.
How strange - elected leaders usually can’t wait to speak up on behalf of even the smallest interest group, if it would help corral a vote or two. This indifference to local financial institutions is inexcusable.
One measure of the MSM doing a better job on the community bank file in 2011 would be when we see stronger efforts by reporters to force some comment on bank failures from elected officials.
Americans need to hear more from elected officials at all levels, particularly in Washington, about what can be done to pull troubled banks back from the brink. (That includes you, too, Mr. President.) Pointed questions from MSM reporters can help a great deal in this.
And it wouldn’t hurt if the topic of bank failures would come up at a Tea Party rally once in a while in 2011, either. That would help keep the feet of reporters and politicians alike to the fire.