Up To 500 Bank Closures Could Absorb FDIC Funds
Patterson warns of 20-25 per cent chance of new great depression this year

Paul Joseph Watson
Propaganda Matrix
Thursday, September 18, 2008

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Mark Patterson, chairman of private equity fund MattlinPatterson, told an audience of financial experts at New York’s Waldorf-Astoria this week that the U.S. could suffer up to 500 bank closures and that the chances of a new great depression are now as high as 25 per cent.

Financial conditions are “probably more challenging than at any time since 1929,” Patterson said, speaking at Dow Jones’ Private Equity Analyst Conference this week.

"We’re not in normal times. If you don’t accept that there is at least a 20 to 25 percent chance of a financial markets led depression you’re fooling yourself," he cautioned, adding that “Saharan-like” credit markets are overwhelming companies.

Following the collapse of Lehman Brothers, Patterson warned that 300 to 500 U.S. banks are set to fail over the next three years and as a result absorb all of the FDIC’s pool of funds.

As we reported on Monday, the Federal Deposit Insurance Corp., which guarantees individual accounts up to $100,000, only has about $50 billion to “insure” about $1 trillion in assets across the nation’s financial institutions.

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This has led top economists like Nouriel Roubini, of NYU’s Stern School and RGE Monitor, to openly warn that a "slow motion run on the banks" is already occurring nationwide as individuals move their deposits to safer havens.

Patterson put the figure at 300-500 bank failures presuming that other well known investment banks survive, something he said “was not such a good assumption.”

"Who could blame him for such a negative outlook?" writes Marc Raybin of HedgeFund.net. "The markets are still reeling from the Dow Jones Industrial Average plummeting more than 500 points on Monday on the one-two-three punch of Lehman Bros. declaring bankruptcy, Merrill Lynch being acquired by Bank of America and American International Group, the world’s largest insurer with $1 trillion on its balance sheet, on the verge of filing for bankruptcy protection itself."

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