Seven more banks fail, bringing this year's total to 52
Filed under: Banks
Late last week, just before the long Fourth of July weekend, seven more banks closed, bringing this year's total of failed banks to 52. And if you're the sort of person who lies awake night thinking about these things, or if your money was with one of these failed banks, you may have questions.So I thought I'd offer a recap of what's been going on, and ask (and answer) a few questions that I imagine people are wondering.
The recap: In Illinois, John Warner Bank in Clinton was closed for business, along with First State Bank of Winchester, Rock River Bank in Oregon (Illinois), Elizabeth State Bank in Elizabeth, First National Bank in Danville and Founders Bank in the ironically-titled Worth. In Texas, it was Millennium State Bank in Dallas, which is now part of the State Bank of Texas.
If I have money in a troubled or failed bank, should I be panicking?
Most people, no. The FDIC (Federal Deposit Insurance Corporation) is looking for buyers for a lot of these banks, and often finding them -- and then when that happens, short of getting some mail, telling you that your bank is under new ownership, you're not likely to notice anything different. For instance, the six aforementioned banks in Illinois, which had 29 branches, that shut down already have multiple new owners. For the customers of banks who can't find a new owner -- which happened last month to the Community Bank of West Georgia -- those folks will get their money back, provided they had less than $250,000 in their accounts. (The FDIC insures all accounts up to $250,000, so provided you don't have more than that in a bank account; most banks are FDIC-insured.) That said, the people who belonged to the Community Bank of West Georgia had to go at least two weeks without access to their money, so it's not a picnic if your bank fails.
Why are these banks still failing?
Entire books will be written about these bank failures, but in the simplest of terms -- this is all still fallout from what brought our economy down last fall: too many risky investments, risky in part because many banks weren't diversified enough in their investments, most of which were over-tangled in mortgage-backed assets. And since unemployment continues to rise, and people continue to be clobbered by their lack of credit and higher interest rates, which means they don't have as much money, they're falling behind on their mortgages.
So the banks sunk most of their investments in housing -- they're still having problems. It's bad news, worth losing sleep over, but at least it's not new bad news, which should be kind of heartening.
If you're morbidly curious... you may want to check out this list, put up by the FDIC, of banks that have failed since 2000. But so far, Georgia leads with the most failed banks since 2007, the year the recession began, Illinois is second, and California is third.
Are more banks likely to fail?
Oh, yeah. Shelia Bair, chairman of the FDIC, said just last month that the banking crisis was far from over, and that there would be "many more bank failures ahead." Since that statement, perhaps a dozen banks have closed. Clearly, much more "fun" is in store.
Geoff Williams is a freelance journalist who often writes about money and banking issues. He is also the author of C.C. Pyle's Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America (Rodale).



Reader Comments (Page 1 of 1)
7-10-2009 @ 8:12PM
Pravin said...
Record 7 banks closed today by FDIC. Tally crosses 50 .
77 banks failed since 2008, 25 in 2008 and 52 in 2009 till now.
6 banks were closed only in Illinois.
Today Illinois has most number of bank failures with 12 bank failures till now this year.
This follows by Georgia with 9 and California with 6 banks failures.
Check the complete list of all the failed banks at :
http://portalseven.com/Failed-Banks-2009
And on google map see where the banks are failing at :
http://portalseven.com/finance/Failed_Banks_Map_2009.jsp
Some statistics about this bank failure :
(1) John Warner Bank,Clinton, IL :
# 46th bank to fail this year in USA
# 7th bank to fail this year and 8th since 2008 from Illinois state.
# As of March 31 has $71 million in assets and $64 million in deposits
# State Bank of Lincoln, Lincoln, IL will assume all deposits of failed bank
(2) First State Bank of Winchester, Winchester, IL :
# 47th bank to fail this year in USA
# 8th bank to fail this year and 8th since 2008 from Illinois state.
# As of March 31 has $32.9 million in assets and $33.3 million in deposits
# All deposit accounts have been transferred to The First National Bank of Beardstown, Beardstown, IL
(3) Rock River Bank, Oregon, IL :
# 48th bank to fail this year in USA
# 9th bank to fail this year and 10th since 2008 from Illinois state.
# As of March 31 has $77 million in assets and $75.9 million in deposits
# All deposit accounts have been transferred to The Harvard State Bank, Harvard, IL
(4) Elizabeth State Bank, Elizabeth,IL :
# 49th bank to fail this year in USA
# 10th bank to fail this year and 11th since 2008 from Illinois state.
# As of March 31 has $58.7 million in assets and $50.3 million in deposits
# All deposit accounts have been transferred to Galena State Bank and Trust Company, Galena, IL
(5) First National Bank of Danville, Danville,IL :
# 50th bank to fail this year in USA
# 11th bank to fail this year and 12th since 2008 from Illinois state.
# As of March 31 has $164.7 million in assets and $144.8 million in deposits
# All deposit accounts have been transferred to First Financial Bank, National Association, Terre Haute, IN
(6) Millennium State Bank of Texas, Dallas,TX:
# 51st bank to fail this year in USA
# 1st bank to fail this year and 4th since 2008 from Texas state.
# As of March 31 has $126.7 million in assets and $120.2 million in deposits
# All deposit accounts have been transferred to State Bank of Texas, Irving, TX
(7) Founders Bank, Worth, IL:
# 52th bank to fail this year in USA
# 12th bank to fail this year and 13th since 2008 from Illinois state.
# As of March 31 has $966 million in assets and $828 million in deposits
# All deposit accounts have been transferred to The PrivateBank and Trust Company, Chicago, IL
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