CHAPTER 11
Distressed and Failed Banks
That is why it is possible for banks to fall apart when people don’t pay their mortgages back. Banks sell assets that are partially made of the future intents of borrowers. When borrowers do something other than promised, those assets no longer exist.
—Jaron Lanier, Author, Who Owns the Future1
Operating any business means risking failure, and bankers from the nation’s 6,000-plus banks know this from experience. In any given year, 1 bank in 10 is likely to be suffering losses, and 1 in 20 has a probability of failing within three years, according a recent Federal Reserve analysis.2 Tellingly, since October 1, 2000, the Federal Deposit Insurance Corporation (FDIC) has taken more than 500 banks into receivership. ...
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