Banks Have Worst Year Since ’34

WASHINGTON — Commercial banks in 1987 suffered their worst year since the Great Depression with a record 184 failures and an 80% plunge in earnings, the government said today. “One could say (banks) had a forgettable year,” said L. William Seidman, chairman of the Federal Deposit Insurance Corp.

But 1988 is expected to be better, he added. Seidman said the banking industry’s poorest performance since 1934 was mostly due to large banks’ setting aside huge amounts of reserves to cover potential losses from loans to Latin American nations. Another reason, he said, was a “near-depression” in the Southwest.