America just to keep getting bigger

NEW YORK: The FDIC's latest quarterly roundup suggests, in aggregate, that the US banking industry is recovering. But dig into the details, and it's pretty clear that massive institutions are continuing to thrive at the expense of the small fry. That's not necessarily healthy.

The Federal Deposit Insurance Corp said the US banking industry earned $28.8 billion in the second quarter, a $7.9 billion increase from a year before. That number is down slightly from the $28.9 billion in earnings recorded during the first quarter.

The agency again warned that earnings increases are mostly due to banks setting aside less to guard against losses from bad loans.

"As the levels of loss provisions approach their historic norms, the prospects of earnings improvement from further reductions in provisions diminish," FDIC Acting Chairman Martin Gruenberg said at a news conference on the release of the agency's quarterly banking report.

The number of institutions on the FDIC's "Problem List" fell for the first time in 19 quarters, from 888 to 865. Total assets of "problem" institutions declined from $397 billion to $372 billion.

Twenty-two insured institutions failed during the second quarter, four fewer than in the previous quarter, and the fewest since the first quarter of 2009. This is the fourth quarter in a row that the number of failures has declined.

Copyright Reuters, 2011