US bank failures inching towards 100-mark
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Last Updated: Sunday, October 04, 2009, 13:44
  
New York: Pushing up the total number of US bank failures so far this year to close to a century, three more US banks have folded up last week even as the recession-hit economy is seeing signs of revival.

Indicating that the country's financial system continues to remain strained, the count of failures this year has gone up to 98. This is nearly four times that of 2008, when just 25 banks went belly up dust.

Warren Bank, Jennings State Bank and Southern Colorado National Bank were shut down by the authorities on October 2.

The Federal Deposit Insurance Corporation, the agency which insures the deposits in more than 8,000 banks, said the three failures would cost its fund about USD 293.3 million.

Staring at soaring bank collapses, the FDIC recently proposed banks to pre-pay fees, which would bolster the agency's insurance fund by USD 45 billion.

Small and medium banks are facing the worst impact of the financial turmoil, as rising unemployment is resulting in higher defaults.

In September, 11 banks failed while July saw 24 entities biting dust, the highest for any month in 2009.

Since July, a whopping 53 banks have collapsed and the numbers are anticipated to rise before the economy fully stabilises.

According to FDIC, the count of problem banks, which are at the risk of failing, have jumped to 416 in the second quarter of 2009.

In August, the country saw the biggest bank failure of 2009, when Colonial Bank, which had assets worth USD 25 billion as on June 30, went out of business.

The collapse of Colonial Bank was estimated to cost FDIC nearly USD 2.8 billion.

During the same month, 15 other banks also went out of business, while the authorities shut down nine banks in June and seven in May.

Peoples Community Bank, Security Bank of Jones County, ebank, First Coweta Bank, Mainstreet Bank, Affinity Bank, Integrity Bank and Community First Bank are among those which were closed this year.

Despite disappointing news from the banking and labour front, the pace of economic decline is coming down. In the second quarter of 2009, US GDP shrank 0.7 per cent, much less than the earlier projection of one per cent.

Bureau Report


First Published: Sunday, October 04, 2009, 13:44


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