Ten US banks collapse each month; 107 fail since Lehman demise

The signs of economic revival notwithstanding, an average of ten banks are going belly up every month so far this year. Out of the 107 failures after the demise of the Lehman Brothers, 15 took place last year.

So far in September 2009, eight banks have gone belly up and the count of failures this year is more than three-fold of just 25 collapses in 2008. Three entities -- Corus Bank, Brickwell Community Bank and Venture Bank -- were shut down by the authorities on Friday.

The collapse of three banks would cost the Federal Deposit Insurance Corporation (FDIC), which is often appointed as the caretaker of failed entities, as much as USD 2 billion. The failure of Corus Bank alone would cost USD 1.7 billion. Last month, a staggering 15 banks shut down.

Banking failures, especially of small and medium ones, are rising on account of higher unemployment which has resulted in more defaults. Presenting a gloomy scenario, the FDIC recently said the count of problem banks, which are at the risk of collapsing, have jumped to 416 in the second quarter of 2009.

Going by the FDIC data, Corus Bank's assets and deposits were worth USD 7 billion each as on June 30. Meanwhile, as on July 24 Brickwell Community Bank had assets to the tune of USD 72 million and deposits of USD 63 million. Venture Bank had assets worth USD 970 million and deposits stood at USD 903 million as on July 28.

In July, a staggering 24 entities failed- the maximum for any month in 2009. Seven banks went out of business on July 2 and July 24. The authorities closed down nine banks in June and seven in May.

Official statistics show that institutions insured by the FDIC charged off USD 48.9 billion in noncollectable loans during the quarter, up from USD 26.4 billion a year earlier. Among the collapsed entities this year are the First Bank of Kansas, InBank, Vantus Bank, Platinum Community Bank and the First State Bank, First Coweta Bank, eBank and Community First Bank.

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