Bank Failures: Consequences Of Expansion

The latest bank failures as the industry slogs through its worst crisis in a generation are showing the consequences of the frenetic expansion that took place when times were good.

Thousands of U.S. banks and thrifts strayed far from their roots, pushing into unfamiliar products and geographic areas that were tied to the unprecedented run-up in housing prices. As such markets have stumbled, some of these banks -- particularly small ones -- are stuck with bad loans, depleted capital and few options.

"When the credit cycle is at its peak, banks start looking out of their market for opportunity," said ...