The solvency of big banks has lapsed into a non-issue, thanks to the massive federal effort that caused so much controversy. But at the small bank level, we're going to see a lot more carnage (bank failure news).

The number of problem U.S. banks, as defined by the Federal Deposit Insurance Corp. (FDIC news), rose 27 percent in the fourth quarter of 2009 to 702. That's the highest level since 1993. Already, 20 have been shut this year and 185 have been shut since January 2008.

So we seem to be well on our way to matching the expectation that up to 300 could close this year. As for the FDIC, it made a profit of $914 million for the quarter. That compares with a loss of $37.8 billion in the fourth quarter of 2008. No one sees this as sign of strength; more than anything it reflects a tough comparison. The funding challenges remain.

For more:
- here's a Reuters article

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