Misleading Headline of the Day

Here's the headline and the link:

Analysts say more U.S. banks will fail

Can we get a timeline or any frame of reference?

Actually, if you did that, the story would fall on its face. The report actually acknowledges as much in the third paragraph, noting that the banking industry is in far better shape than in the late 1980s and early 1990s.

They worry that as many as 150 banks may fail in the next 12-18 months.

Out of 7,500.

So far, this year only six banks have failed:

Still, only six lenders have failed so far this year, including IndyMac. In 1994, the Federal Deposit Insurance Corporation listed 575 banks that it considered to be troubled. As of this spring, the agency was worried about just 90 banks. That number may go up in August, when the government releases an updated list.

Things may be bad for some banks because they followed Congressional directives to provide loans to more people without the bothersome requirement to make sure that they had the capacity to repay because that might limit minority ownership of homes, but the vast majority of banks are on sound fiscal footing.

However, it's the rumor of bank problems that are feeding the current problems - most notably the IndyMac bank rush due to Sen. Chuck Schumer's letter urging the FDIC to take steps to prevent a bank rush. Far from quelling worried depositors, that letter spurred the bank rush that forced the FDIC's hand and required it to step in.

While IndyMac wasn't on the FDIC radar, it was Schumer's actions that led to the FDIC having to step in as a last resort.

Some major banks may still fall before all is said and done, but the end result will be a banking industry that is in far better shape to handle these crises going forward and whose lending practices will be shaped by the lessons learned the hard way.