Ten US banks bite the dust every month; 81 failures in `09

Last Updated: Sunday, August 23, 2009 - 10:56

New York: Four more American banks went
belly up last week, pushing the total failures to a staggering
81 entities so far this year, even as the country`s economy is
showing early signs of recovery.

In one of the biggest collapses this year, Guaranty Bank,
which had assets worth USD 13 billion, was shut down by the
regulators on August 21.

Reflecting the continuing financial turmoil, the count of
failures so far in 2009 is more than three times that of just
25 bank collapses in 2008.

On an average, the total failures this year translates to
10 bank collapses every month.

Other entities that went out of business were eBank,
First Coweta Bank and CapitalSouth Bank, according to the
Federal Deposit Insurance Corporation (FDIC), which is often
appointed as the caretaker of failed entities.

The collapse of the four banks would cost FDIC as much as
USD 3.26 billion, with the shutting down of Guaranty Bank
alone accounting for USD three billion.

On August 14, the authorities shut down Colonial Bank,
the largest bank failure in 2009. The entity had assets worth
USD 25 billion as on June 30.

So far this month, 12 banks went belly up and the numbers
are expected to climb as higher unemployment could result in
increased defaults.

Guaranty Bank had assets to the tune of USD 13 billion
and total deposits worth USD 12 billion as on June 30, 2009.
BBVA Compass would buy USD 12-billion assets of the entity,
while the rest would be retained by the FDIC for later

A whopping 24 entities went out of business in July, the
highest 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

US Federal Reserve Chairman Ben S Bernanke last Friday
said that after contracting sharply over the past year,
economic activity appears to be leveling out, both in the US
and abroad. He also noted that the prospects for a return to
growth path in the near term appear good.

Moreover, the US economy shrank less than expected at one
percent in the second quarter of 2009.

Among the banks which have been shut down this year
include Dwelling House Savings and Loan Association; Community
Bank of Arizona; Union Bank, National Association; Waterford
Village Bank and First State of Altus.

Bureau Report

First Published: Sunday, August 23, 2009 - 10:56

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