Al Seib | Los Angeles Times | Getty Images
A Los Angeles Police Officer uses yellow tape to cordon off an area for customers with names on a list waiting to enter the IndyMac Federal Bank branch in Encino in July, 2008.
Not a single bank failed last year, a rare occurrence that highlights the strength of the U.S. banking system.
In fact, 2018 was only the third year since the Federal Deposit Insurance Corporation was founded in 1933 that a calendar year passed without a bank failure, according to the Calculated Risk blog.
Thanks to the U.S. economic expansion, corporate tax overhaul and post-financial crisis rules that bolstered safety, banks have been thriving. The six biggest U.S. lenders were on track to generate more than $100 billion in profit, an all-time record, according to Bloomberg.
But the smallest and most vulnerable institutions – those most likely to fail – seem to be benefiting as well. Just eight banks failed in 2017, and all were acquired by larger lenders.
Failing banks used to be a more common occurrence. The peak year for failures after the financial crisis was 2010, when 157 institutions collapsed. Before that, during the savings and loan crisis, the peak year for failures was 1989, when 534 lenders failed.
In a bank failure, regulators work to sell the lender’s assets to another institution and the FDIC assumes responsibility for the rest.