TALKING BIZ NEWS EXCLUSIVE
The Investigative Reporting Workshop at American University, in conjunction with msnbc.com, has launched a system for business journalists called BankTracker that examines banks to determine which ones are financially secure and which ones are in danger.
The analysis is based on reports every bank is required to file each quarter with the Federal Deposit Insurance Corp., the federal agency that protects deposits and is part of the bank regulatory system.
The American Bankers Association and others in the industry asked msnbc.com and the Investigative Reporting Workshop to refrain from publishing a list of banks and their “troubled asset ratios.”
Wendell Cochran, senior editor of the Investigative Reporting Workshop and a journalism professor at American, notes the FDIC data provides the best public glimpse into the operations of a bank. Cochran is a former business journalist.
“In many ways, this is an extension of work I began doing 25 years ago when I was a business writer at the Des Moines Register,” Cochran told Talking Biz News. “Banking data was my initial foray into computer-assisted reporting. Each year we published agate tables — and how many in your audience will remember those? — of every bank in the state.
“When the state was going through a major agricultural recession, leading to bank failures, I created this ‘troubled asset ratio’ as a way of judging bank health. Later, while I was the national business correspondent at Gannett News Service, we did projects about the S&Ls and banks. Again, we listed every bank and S&L in the country and included this ratio.
“So, it was natural to me when the banking crisis broke out last fall to begin planning a similar project, this time taking advantage of the interactive nature of the Web.”
The service discovered, among other findings, that:
- 163 banks had more troubled assets (nonperforming loans and foreclosed property) on their books at the end of 2008 than they had capital and loan loss reserves, meaning that potentially the bank could not cover the losses on loans and other assets it has been absorbing. A year ago, 23 banks had a troubled asset ratio of greater than 100 percent.
- There are great variations among banks. Many smaller, community banks that avoided dealing in the riskiest types of mortgage lending continue to weather the storm relatively well. Meanwhile, for banks that got deeply involved in subprime lending or that are in states where the real estate collapse is most pronounced, the stress levels are high.
The system can be found here.
