Monday, December 6, 2010

Bank Branch Closures Forecast



The financial analyst who rose to fame for her bearish calls on banks ahead of the financial crisis, sees more bad news ahead, predicting that banks will close 5% of their branch offices over the next year and a half.


Meredith Whitney, who rose to fame for her bearish calls on banks ahead of the financial crisis, now sees 5,000 bank branches closing by 2012 because bank profits are in "structural decline." This, she warns, is part of the "inevitable de-banking of the U.S. financial system,"Fortune Magazine reports.

In a report released Monday afternoon, Whitney explains how financial reforms, such as this summer's Dodd-Frank Act, will cause profits at banks to decline. As part of their efforts to increase profits, the financial institutions will close 5% of their bank offices.

For example, regulators' decision to crack down on such practices as the $35 overdraft fees will result in higher prices for other services, further increasing the number of customers who cannot afford banking services.

"The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable 'de-banking' of the U.S. financial system," she writes.

In January 2009, a Federal Deposit Insurance Corp. survey found that 30 million U.S. households were "unbanked" or "underbanked" -- that is, they did not have accounts at banks or other mainstream financial institutions, despite FDIC efforts to encourage banks to expand their low-cost offerings.

Whitney expects the ranks of the "unbanked" will rise to 41 million households in 2015, as institutions reconsider the costs and benefits of all manner of products.

See full article from DailyFinance:http://srph.it/dGpbCQ



Melly Alazraki

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Stock Market Writer and Analyst
Melly Alazraki is a ten-year veteran of the financial world, working internationally for both sell and buy side firms. She's been a contributing editor with BloggingStocks for nearly four years and writes about the stock market and pharmaceutical industry for DailyFinance.


See full article from DailyFinance:http://srph.it/dngKG7