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'Another 150 to 200 banks will fail': analyst

The FDIC will have to boost bank insurance rates (which means lower profits and higher fees passed on to customers) to cover all the local banks likely to get taken over this fall, says bankwatcher Dick Bove

Bank regulators "are content" with the nation's big investment banks (Goldman Sachs, Morgan Stanley) and commercial banks (Citigroup, JPMorgan Chase, even Bank of America), and with the large regional banks (Wells Fargo, PNC, BB&T), notes veteran bank analyst Richard X. Bove, now at Rochdale Securities.

Instead the government's "concentrating on strengthening" smaller banks - which means the Federal Deposit Insurance Corp. will keep taking them out of business, almost every Friday, after closing hours: "Perhaps another 150 to 200 banks will fail." That means higher FDIC fees, lower profits, and higher customer costs for the several thousand remaining smaller and midmarket solvent banks.

Among Philadelphia-area banks, the weakest, like Harleysville National, have found buyers, so far. The FDIC subsidies are going instead to bail out banks in Georgia and other states where home and development lenders were especially reckless.