Business & Investment

Four bank failures in 2020

Along Calculated risk of 1/03/2021 12:43:00 PM

In 2020, there were four bank failures. This was the same number as in 2019. The median bankruptcy since the FDIC was founded in 1933 was 7. Therefore, the four failures in 2020 were below the median.

The failures associated with the major recession / housing collapse / financial crisis have been behind us for several years now.

The first graph shows the number of bank failures per year since the FDIC was founded in 1933.

Click the graph to see the enlarged image.

Usually, about 7 banks go bankrupt each year.

Note: There were numerous failures in the 80’s and early 90’s. Many of these failures were particularly related to loose lending of commercial real estate. Also, many of the failures of the 80’s and 90’s occurred in the loosely regulated Texas.

In the 80’s and early 90’s, there were more failures than the financial crisis, but the financial crisis was much worse (larger banks failed and were bailed out).

Bankruptcy before FDIC The second graph contains pre-FDIC failures. In a typical year before the Great Depression, 500 banks would go bankrupt and depositors would lose most of their savings.

Then, during the Great Depression, thousands of banks went bankrupt. Note that the S & L crisis and the recent financial crisis look small in this graph.

Four bank failures in 2020 Four bank failures in 2020

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