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US financial system sees 33 bank failures in ‘09

US financial system sees 33 bank failures in ‘09
PTI
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First Published: Sun, May 10 2009. 10 51 AM IST
Updated: Sun, May 10 2009. 10 51 AM IST
New York: The Wall Street may be rejoicing at the outcome of the stress tests on financial institutions, but elsewhere smaller entities are collapsing at a horrendous pace, with 33 US banks shuttered so far this year.
The failure of 33 entities translates into an average of little over six banks every month in 2009.
Bearing the brunt of the economic turbulence, many of the regional and smaller banks have gone belly up this year.
The latest one to join the failed list is Westsound Bank. It was shut down on Friday, the Federal Deposit Insurance Corporation, which is often appointed as the receiver of failed banks, said.
This month alone, four banks have been shuttered and three of them - America West Bank, Citizens Community Bank and Silverton Bank - were closed on 1May.
In yet another reflection of the deep financial turmoil, the number of failures this year is much more than 25 bank collapses in 2008.
The results of the stress tests - to ascertain how well capitalised the nation’s leading financial institutions are - showed that ten banks have to raise $75 billion in fresh capital. The outcome has also dispelled uncertainty about the financial sector, pushing the American stocks higher.
Westsound Bank had total assets worth $334.6 million and deposits to the tune of $304.5 million in brokered deposits, as on 31 March, 2009, according to the FDIC.
A staggering 47 banks have gone belly up since the global financial crisis turned for the worse in September 2008, when the famed Lehman Brothers filed for bankruptcy.
Moreover, altogether 58 banks have collapsed since the start of January 2008. The American economy officially entered into recession in December 2007 and has shrunk 6.1% in the first quarter of this year.
On 24 April, four banks - First Bank of Idaho, First Bank of Beverly Hills, Heritage Bank and American Southern Bank - were shut down, whereas the same number of entities failed on 13 February.
Great Basin Bank of Nevada, American Sterling Bank, New Frontier Bank, Colorado National Bank, Freedom Bank of Georgia, Omni National Bank and Sherman County Bank are among the firms which have collapsed in 2009.
With majority of the bank failures happening in the wake of the economic turmoil, 85 such entities have been closed down since 2000.
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First Published: Sun, May 10 2009. 10 51 AM IST