If they continue at their current pace, bank failures will be down significantly in 2012. That's not just good news for bankers. A more stable banking environment has several benefits for consumers, which may eventually include better interest rates on deposits.
First half bank closures
The Federal Deposit Insurance Corporation (FDIC) reported 30 bank closures in the first half of 2012. While that might sound like a large number of bank closures, it's less alarming considering there are more than 7,000 FDIC-insured institutions in the nation.
The 2012 closure rate is also encouraging when trends from recent years are considered. Bank closures peaked at 157 in 2010. Last year they were down to 92, and this year they are on pace for 60.
Historically speaking, 60 is not a low number, however. In 2007, there were three bank failures, and there were none the year before. Still, considering where the industry has been in recent years, even 60 would be a step in the right direction.
Four benefits to consumers
Of course, bank deposits in the United States are insured by the FDIC, up to $250,000 per depositor per bank. With this backstop behind them, does it really matter to consumers that fewer banks are failing? It does.
Here are four specific benefits to consumers from the slowdown in bank failures:
Trouble with banks was one of the first harbingers of what has become known as the Great Recession, and of the lackluster recovery that has followed. Perhaps an improved banking environment will be an early signal that the economy is finally getting healthy again.