The FDIC shuttered nine banks on Oct. 30, 2009, bringing the total for the year so far to 115.
Yesterday’s closures will cost the FDIC an estimated $2.5 billion, combined.
According to an AP report (via Clusterstock):
Regulators shut California National Bank of Los Angeles and eight other banks as the weak economy continues to produce a stream of loan defaults.
The banks closed by the Federal Deposit Insurance Corporation were in California, Illinois, Texas and Arizona. They were divisions of privately held FBOP Corp., a Chicago-based bank holding company.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the deposit insurance fund. It has fallen into the red.
Failures have been especially concentrated in California, Georgia and Illinois. While the pounding from losses on home mortgages may be nearing an end, delinquencies on commercial real estate loans remain a hot spot of potential trouble, regulators say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks, especially, hold large concentrations of these loans.
The 115 failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $25 billion so far this year, and hundreds more bank failures are expected to raise the cost to around $100 billion through 2013.
The 115 bank failures this year compare with 25 last year and three in 2007.
The number of banks on the FDIC’s confidential “problem list” jumped to 416 at the end of June from 305 in the first quarter. That’s the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.
Also, be sure to check out this interactive visual of recent bank failures from the Wall Street Journal. The graphics are great. They really help put the whole mess in perspective.