Washington, D.C. The nation’s banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.
Federal Deposit Insurance Corp. said Thursday that U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier.
Rising losses on loans and eroding values of assets “overwhelmed” banks’ revenue in the fourth quarter, the FDIC said. More than two-thirds of all banks and thrifts turned a profit in that period but their earnings were outstripped by large losses at a number of major banks.
FDIC Chairman Sheila Bair said the agency today will raise the insurance premiums paid by U.S. banks and thrifts, effective in the second quarter, to rebuild a fund depleted by 25 bank failures last year.