Bove: FDIC Fees Will Clip 25% Of Bank Earnings

Even healthy U.S. banks could have some serious earnings drag over the next few years.

Since the FDIC will probably need $100 billion, assuming 300 – 400 more banks fail, Richard Bove estimates that higher resultant FDIC premiums could drain 20-25% of the total banking industry’s earnings for two years.

If more banks fail than Mr. Bove expects, we’ll obviously have more failed banks and fewer healthy ones. Thus the earnings drag from FDIC premiums could go much higher should the U.S. financial system hit an unexpected bump.

Being a healthy bank doesn’t make you immune to the failings of your peers.

Starts at 2:42:


NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at