According to The Wall Street Journal, troubled banks are sticking around a bit longer, hindering the health of the U.S. economy. In 2013, 59% of banks were deemed ‘significantly undercapitalized’ for at least a year before they failed, compared to 20% in 2012. WSJ explains:
"Once a bank has chronic severe problems, the chances it will come back are really, really, really poor, and the chances it will cost money are very high," said William K. Black, a bank regulator during the 1990s savings-and-loan crisis.
Regulators wouldn't comment on the idea that they are allowing weak banks more time, but they contend they are striking a proper balance between giving struggling banks too much rope and not enough.Sponsor Content