US sees 17 bank failures in 2009

US sees 17 bank failures in 2009
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First Published: Sun, Mar 08 2009. 10 38 AM IST
Updated: Sun, Mar 08 2009. 10 38 AM IST
New York: The number of US bank failures is mounting with each week passing by as 17 lenders went belly up so far this year amid the deepening recession in the world’s largest economy.
With the collapse of Freedom Bank of Georgia this month, a staggering 69 banks have collapsed since 2000.
In the first two months of this year, a stunning 16 banks went belly up — which is more than half the total number of such failures in 2008. Last year, 25 banks were closed down by the American authorities.
The Federal Deposit Insurance Corporation, which is often appointed as the receiver for failed banks, said the Freedom Bank of Georgia was shut down on 6 March.
Freedom Bank of Georgia had assets to the tune of $173 million and deposits worth $161 million as on 4 March, 2009.
In February, 10 banks were closed down, making it the highest for any month since 2000. A total of six banks had failed in January.
Majority of the bank failures happened last year after the financial turmoil turned worse with the bankruptcy of investment banking entity Lehman Brothers in September.
Security Savings Bank, Heritage Community Bank, Silver Falls Bank, Beaverton and Alliance Bank, National Bank of Commerce, and Ocala National Bank are among the entities which collapsed this year.
Four banks were closed down on 13 February alone. The failed entities on that day were Pinnacle Bank of Oregon, Corn Belt Bank and Trust Company, Riverside Bank of the Gulf Coast and Sherman County Bank.
Last month, official data showed that commercial banks and savings institutions insured by FDIC reported a net loss of $26.2 billion in the fourth quarter of 2008. It is also the first ever quarterly loss since 1990.
Starting January 2008, a whopping 42 banks have failed — which is more than half the total collapses since 2000.
However, there were no bank failures in 2005 and 2006.
The American economy, which shrank 6.2% in the fourth quarter of 2008, continues to reel under the ravaging financial crisis. In recent months, the Federal government has been forced to bailout many banking majors like Citigroup and Bank of America.
Even though, President Barack Obama has come up with various measures including the massive $787 billion stimulus package, the financial sector is yet to show any signs of revival.
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First Published: Sun, Mar 08 2009. 10 38 AM IST