History of U.S. Bank Failures
The chart above shows annual bank failures from 1934-2007 using data from the FDIC. Several facts:
1. There have only been two years since 1934 when NO U.S. banks failed: 2005 and 2006.
2. Only 3 U.S. banks failed in 2007.
3. Besides the 2005-2007 period, there has never been another three-year period since 1934 when only 3 U.S. banks failed.
4. Even at the peak of the S&L banking crisis when more than 1,000 banks failed in 1988 and 1989, at a rate of more than 2 every business day for two consecutive years, the economy survived without going into a recession.
Bottom Line: The U.S. banking system is probably stronger and more stable today than at any time in U.S. history. A subprime crisis by itself will probably not be enough to pull the U.S. economy into a recession in 2008.