Recovery is here?
Even as various analyst and economists are falling head over heels with claims of economic recovery having started, Friday night marked the tally of US failed banks crossing 100. The number of banks which had to down their shutters in 2009 is 106 by now. This is almost four times the number of banks that went out of business in 2008.
- Earlier on Friday evening the dubious honor of the 100th failure went to Partners Bank, of Naples, Fla., which had $65.5 million in assets, according to the Federal Deposit Insurance Corp.
- The 101st failure was American United Bank, of Lawrenceville, Ga., which had $111 million in assets.
- The 102nd failure was another Naples, Fla., institution: Hillcrest Bank Florida, which had $83 million in assets.
- The 103rd closure was Bradenton, Fla.-based Flagship National Bank, with $190 million in assets.
- The 104th was Bank of Elmwood, based in Racine, Wis., which had $327.4 million in assets.
- The 105th failure was Riverview Community Bank of Otsego, Minn., with $108 million in assets.
- The 106th failure was First Dupage Bank in Westmont, Ill., which had $279 million in assets.
Federal Deposit Insurance Corporation (FDIC), which insures banks will cover all deposits to a limit of 250,000. FDIC has been working as the insurer of banks since the Great Depression. Sheila Bair, Chairperson, FDIC in a video message posted on the organization's website said that for the insured customers such a hapening is a "non-event" but at the same time sounded cautious about the future.
In fact, to reassure borrowers, FDIC chair Sheila Bair posted a video message to the agency's Web site, saying "for the insured depositor, a bank failure is a non-event."
Still, Bair cautioned that "until the healing process is complete, there will be more bank failures."
As banks continue to tumble, the federal reserves are feeling the heat. The fund now stands at $7.5 billion, which is just one-sixth of what it was at a $45 billion a year ago.
FDIC, which maintains a list of "problem banks", when factors forthcoming expected closures, says the fund is in the red and will likely stay there through 2012. Bank failure costs are expected to total $100 billion over the next four years, leaving regulators strapped for cash.
To replenish the fund the agency had suggested last month that the banks should pay up the insurance premiums for next three years in advance. In June this year, FDIC had a list of 416 problem banks.
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Phoenix, Arizona, United States