It is even worse when those who have taken out loans cannot pay them back. This is the situation right now with many farmers in the United States. Such default is causing many smaller regional banks to fail. “Exactly one-half of the banks on the 1985 failure list were designated as farm banks, that is, at least 25% of their loans were related to agriculture,” says the financial newspaper American Banker.

Outright fraud and embezzlement is another reason for bank failure. The age of electronic transfers has made possible stealing of funds that makes old-time bank holdups look tame by comparison. “The American economy suffers an annual loss of over 500 million dollars in this way,” states the Paris daily newspaper Le Figaro.

[Chart/​Picture on page 6]

U.S. Bank Failuresa

1977 - 6

1978 - 7

1979 - 10

1980 - 10

1981 - 10

1982 - 42

1983 - 48

1984 - 79

1985 - 120

[Footnotes]