Banking Situation in the US Continues to Decline

For those out there that think the economy will turn around in the 2nd half of this year, it will require a much healthier banking system then we have and things at the banks continue to deteriorate. Personally, I think we will be lucky to be of the current recession by mid-2010. As an aside the article below from Market Watch is validated by what I am hearing from contacts at the banks. Text in bold is my emphasis.

Bank loans were going bad at a faster pace in the fourth quarter of the year, forcing banks to charge-off a record $34.5 billion in delinquent loans, the Federal Reserve reported Tuesday.

The seasonally adjusted delinquency rate for all bank loans rose to 4.6% in the fourth quarter from 3.7% in the third quarter. That's the highest delinquency rate since 1992 in the aftermath of the savings & loan crisis. A year ago, the delinquency rate was 2.4%.

Delinquencies were growing faster last quarter than at any other time since the Fed started collecting the delinquency data in 1985.

For residential real estate, the delinquency rate rose to a record 6.3% in the fourth quarter from 5.2% in the third quarter and 3% a year earlier.

Consumer credit card delinquencies rose to a record 5.6% from 4.8% in the third quarter.
Delinquencies for commercial real estate loans increased to 5.4% in the fourth quarter from 4.7% in the third, and double the rate a year earlier. (The next she to drop in 2009.)

The charge-off rate increased to 1.9% from 1.5% in the third quarter, with banks charging off a record $35.5 billion, up from $24.2 billion in the third quarter and $13.9 billion in the fourth quarter a year earlier.