FDIC adds staff to prepare for bank failures

WASHINGTON -- Anticipating an increase in troubled financial institutions, federal regulators will increase by 60 percent the number of workers who handle bank failures.

The Federal Deposit Insurance Corp. wants to add 140 workers to bring staff levels to 360 workers in the division that handles bank failures, John Bovenzi, the agency's chief operating officer, said Tuesday.

"We want to make sure that we're prepared," Bovenzi said, adding that most of the hires will be temporary and based in Dallas.

There have been five bank failures since February 2007 following an uneventful more than two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years.

Analysts see casualties rising but don't believe they will reach early-1990s levels.

Gerard Cassidy, managing director of bank equity research at RBC Capital Markets, projects 150 bank failures over the next three years, with the highest concentration coming from states such as California and Florida where an overheated real estate market is in a fast freeze.

The FDIC provides insurance for deposits up to $100,000.

There are 76 banks on the FDIC's "problem institutions" list, which would equate to about 10 expected bank failures this year, though FDIC officials declined to make projections.

Historically, about six banks fail per year on average, FDIC officials said.

There have been two failures in 2008, both small Missouri-based banks.