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U.S. bank failures consist of both federally chartered and smaller, state-chartered banks. The federal government insures both and guarantees deposits of up to $250,000 per account.
Overhanging the banks’ future is the health of the U.S. economy. That, in turn, hinges on whether employers step up hiring and sectors like manufacturing and construction improve. Europe’s debt crisis poses a big threat, too.
U.S. banks have reduced their exposure to Europe. But a collapse of the 17-country euro alliance would likely weaken the U.S. banking system. Export markets for U.S. manufacturers could shrink. The U.S. economy would slow. Businesses and consumers whose loans drive banks’ revenue would find it harder to repay their loans. And banks would be squeezed.
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