Business

Banks lost $32.1 billion

WASHINGTON — Federal regulators now say the nation's banks lost $32.1 billion in the final quarter of last year, even worse than the $26.2 billion originally reported last month.

The Federal Deposit Insurance Corp. said Friday that "significant" revisions it received from banks also lowered the industry's net income for all of last year $16.1 billion to $10.2 billion.

Rising losses on loans and eroding values of assets bit into the revenue of U.S. banks and thrifts in late 2008, causing their first quarterly deficit in 18 years.

The $26.2 billion loss originally reported for the October-December period already was the largest in 25 years of FDIC records. Banks had a $575 million profit in the fourth quarter of 2007.

And the originally reported 2008 net income of $16.1 billion was the smallest annual profit since 1990.

The FDIC's revised banking industry data also include "substantially higher" charges for an accounting item known as goodwill impairment, which reduced the overall net income for the quarter.

Goodwill is an asset on a company's balance sheets, which gives an idea of what it is worth beyond the tangible — among other things, the added value from the potential for future success.

The recession and stressed financial markets have reduced the goodwill value, for example, of companies that were acquired by others. So the acquiring companies have written down those assets. taking a goodwill impairment charge.

The FDIC expects bank failures to cost the deposit insurance fund more than $40 billion over the next four years.

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