WASHINGTON ( TheStreet) - A large chunk of the U.S. banking industryremains on shaky financial ground following the 2008 financial crisis, according to the Federal Reserve's top bank regulator.
Reuters reported Wednesday that Patrick Parkinson, the director of the Federal's Division of Banking Supervision and Regulation, that although asset quality was "stabilizing," the banking system was "still in the repair and recovery stage."
"Around 30 percent of all banks have less than satisfactory supervisory ratings," he is quoted as saying at the American Bankers Association annual government relations summit Washington, according to Reuters.
Part of the repair and recovery is the continued shakeout of banks whose capital has been overwhelmed by loan losses.In the beginning of the credit crisis, the story centered on prominent mortgage lenders, including IndyMac Bank, which failed in July 2008 and Washington Mutual, which was the largest-ever U.S. bank failure in September 2008. After being seized by the Office of Thrift Supervision, the Federal Deposit Insurance Corp. was appointed receiver and sold the failed bank to JPMorgan Chase (JPM - Get Report). As the banking crisis has progressed, most of the failing institutions have been community banks focused on commercial construction, land acquisition and development loans. Independent bank ratings underline Parkinson's position that the industry is still in recovery mode. Weiss Ratings uses a very conservative ratings model, placing the greatest weight on capital strength, credit quality and earnings stability to assign ratings ranging from A-plus (Excellent) to E-minus (Very Weak). Based on third-quarter financial data for all U.S. banks and thrifts, Weiss assigned 34% of the group ratings of D-plus (Weak) or below.