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Great Credit Crunch Issues Remain Five Years After Start

[Read: <a target="blank" data-add-tracking="true" href=""><em>Behind the Ethanol Scandal </em></a>]
At the end of fourth-quarter 2010, First National Bank had $3.83 billion in assets with $622 million in C&D loans on its books. Its risk ratios at the end of 2010 were 181.0% and 492.7%, respectively, with a pipeline 90.7% funded. Clearly an overexposure to CRE loans caused its demise.

The FDIC has slowed down the bank failure process. Only 25 in 2008, 140 in 2009, 157 in 2010, 92 in 2011, 51 in 2012 and only 22 so far in 2013. That's a total of 487 bank failures, with more to come. My ongoing prediction has been that at least 500 failures would occur before the Great Credit Crunch comes to an end.

An ignored victim of the Great Credit Crunch has been Main Street USA. We see a higher cost of living as the costs of home and health insurance rise, while family incomes slip. Even with a five-year U.S. Treasury yield up to 1.6%, most big banks offer savers only 0.8%. The big banks have also raised rates on loans to small businesses. The best rate you can get on a credit card is about 12%. Explain that, given a 0% federal funds rate.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at
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