New York: The American economy may have witnessed quarterly expansion, but the count of bank failures are soaring and a staggering 115 entities have gone out of business in the first 10 months of 2009.
Indicating that the nation's financial system continues to remain jittery, the bank failures in 2009 have witnessed a four-fold rise from that of last year, when just 25 went belly up.
The authorities closed down nine banks on October 30. They are Bank USA, Community Bank of Lemont, San Diego National Bank, California National Bank, Pacific National Bank, Park National Bank, Citizens National Bank, Madisonville National Bank and North Houston Bank.
According to the Federal Deposit Insurance Corporation (FDIC), which insures deposits of over 8,000 American banks, these collapses would cost its Deposit Insurance Fund about USD 2.5 billion.
The nine banks had combined assets worth USD 19.4 billion and deposits of USD 15.4 billion, as on September 30.
Moreover, the collapse of 115 banks so far this year is the highest for any year since 1992, when 181 entities were shut down, in the wake of the savings and the loan crisis.
Even as the economic activities is slowly picking up, the bank failures are anticipated to climb in the coming months, mainly due to higher unemployment resulting in increased defaults.
After four straight quarters of contraction, the US GDP expanded 3.5 percent for the three months ended September.
The country saw seven bank failures on October 23 and those collapses cost the FDIC fund nearly USD 356.7 million.
Going by estimates, bank collapses this year have made the FDIC poorer by about USD 25 billion and the agency has projected such costs to reach USD 100 billion by 2013.
In October, 20 banks have gone out of business, much higher than 11 failures in September.
A whopping 24 entities collapsed in July, the highest for any month in 2009.
Since the fall of Wall Street giant Lehman Brothers in September last year, 130 US banks have been shut down.
In 2009, the biggest US bank failure was that of Colonial Bank, which had assets worth USD 25 billion as on June 30.
Among the entities which went out of business this year are Partners Bank, Hillcrest Bank Florida, Bank of Elmwood, First DuPage Bank, First Coweta Bank, Georgian Bank, Warren Bank, Integrity Bank and First State Bank of Altus.
Bureau Report