Although the FDIC keeps a list of troubled banks, it doesn’t want you to know about it. The reason for this secrecy makes perfect sense: the FDIC fears that it’s analysis could become a self-fulfilling prophecy, triggering a run on a bank.
Of course, for investors this habit of secrecy is highly annoying and counter-intiutive. While companies are supposed to disclose serious trouble to investors, the government practices the opposite. You can see how that would get annoying.
Fortunately, libertarian blogger Chris Brunner has decided to put together an independent list of troubled banks. It is based on the “Texas Ratio” developed by Gerard Cassidy, measuring non-performing assets against less government guaranteed loans. “Basically, the higher the ratio, the worse the situation is for that particular bank,” Brunner explains. “Banks with a ratio of 100 and higher are in very serious danger of collapse, and banks with a ratio of 50 or higher are vulnerable.”
Here’s the top 10 on Brunner’s list. Click here for the whole thing.