Bankruptcies Put Additional Pressure On Banks

Highlighted below are these companies: Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), Comerica (CMA) and Regions (RF).

During 2008, personal bankruptcies had the most significant increase since the major rewriting of the laws governing it were put in place in 2005.

According to data from U.S. bankruptcy courts and compiled by bankruptcy data firm Automated Access to Court Electronic Records,  total filings of Chapter 7 and Chapter 13 bankruptcies rose 33% year-over-year to 1.1 million compared to 0.8 million. While the level was not even close to the record of 2.1 million filings for 2005 (consumers rushed to file before a federal bankruptcy reform law making files more difficult went into effect) the increase was substantial nonetheless.

Though experienced everywhere — and no jurisdiction exhibited a decrease in filings (neither on a per capita basis nor exhibited in the raw numbers of filings) — the overall level was uneven.

Alaska retained its title as the land of the fewest personal bankruptcies with only 877 were filed for all of 2008, or 1.28 filings per 1,000 residents. Texas had only about 1,500 more Chapter 7 and Chapter 13 filings than experienced in the year before the year before. However, five states in particular where hit hard by the economic compression and housing issue experienced the greatest increase in per capita bankruptcy filings per 1,000 residents — Nevada (7.15), Delaware (4.02), California (3.57), Florida (3.63), and Rhode Island (3.99). Unfortunately, Tennessee retained its dubious distinction of “Overall Highest Per Capita Filings Rate” for the second consecutive year, recording 7.65 filings per 1,000 residents in 2008.

Unless the government can produce a program to require financial institutions and individuals to be fiscally responsible, we would anticipate the level of foreclosures to expand. This would put additional pressure on the housing markets and financial institutions was well to include but not limited to such entities as Citigroup (C), BankAmerica (BAC), Wells Fargo (WFC), Comerica (CMA) and Regions (RF).

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