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by Heesun Wee
Forget the unemployment rate, durable goods orders or the Baltic Freight Index. Veteran market watcher Richard Suttmeier says the FDIC quarterly banking profile is "the single most important leading indicator for the U.S. economy."
Released about 55 days after the end of each quarter, the FDIC report offers a bird's eye view of lending activity in America, especially among smaller Main Street lenders and small businesses. "It's a balance sheet of our economy," says Suttmeier, chief market strategist at Niagara International Capital and ValueEngine.com.
Based on the latest quarterly profile, for fourth-quarter 2009, the state of the banking system is "not as good as Wall Street is saying. Particularly when you get beyond the 'too big to fail' banks," Suttmeier tells Aaron in the accompanying clip.
Bad Banks Can't Lend As was widely reported, the most recent report showed the number of "problem" banks rose 27% in 2009 to 702 -- the highest level since 1993.
Less widely discussed is Suttmeier's concern that more than half of the nation's roughly 8,000 banks "can't lend anymore" because of rising levels of bad loans on their books. The problems are especially acute in construction & development and commercial real estate loans, he says, citing the FDIC quarterly report. Because so many of these loans are delinquent, banks don't have the capital coming in to lend out and thus are content to mostly sit on deposits, he explains.
Why Banks Can't Lend: U.S. Financial System "Not as Good as Wall Street Says"
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