25 US banks failed this year so far2 min read . Updated: 14 Dec 2008, 03:04 PM IST
25 US banks failed this year so far
New York: Reeling under a recession that’s getting worse, the US has seen the collapse of 25 banks this year, with two entities going belly up on average each month.
The world’s largest economy, which officially entered a recession phase in December last year, has seen the demise of three banks this month.
Sanderson State Bank and Haven Trust Bank, both of which were seized by the authorities on Friday, are the latest to join the league of failed entities.
Last week, First Georgia Community Bank went bust.
According to data available with the Federal Deposit Insurance Corporation, an independent agency of the US government often appointed as receiver of failed banks, 25 banks failed so far this year. On average, it means two bank failures every month.
Ironically, in the past eight years, 52 banks went belly up and more than half of them collapsed in the ongoing financial turmoil.
As many as 27 banks went bust since September last year, when the economic crisis surfaced in the country’s banking sector.
The National Bureau of Economic Research (NBER) has said that the US entered a recession phase in December last year, the longest since World War II.
There were five bank failures in November, making it the highest in any month this year.
Among the five, three entities — PFF Bank and Trust, Downey Savings and Loan, and The Community Bank — folded up on 21 November. The other two were Security Pacific Bank and Franklin Bank.
Before 2008, the highest number of bank collapses happened in 2002, when 11 entities went bust.
This year, there were four bank failures in October, three each in September, August and July, two in May and one each in March and January.
There were no bank collapses in 2005 and 2006, while just two banks failed in 2000.
The ones that failed have been mostly small and regional banks, primarily due to the falling housing market.
However, the raging credit crisis has also seen the collapse of Washington Mutual, the US’s largest savings and loan entity, which is among the biggest bank collapses in 2008.
The failed firm, better known as WaMu, has been snapped up by its rival JPMorgan Chase.
The number of banks in America have steadily been declining since 1990.
FDIC data show that the number of commercial banks in America has come down by over 5,000 in the past 18 years.
On the other hand, a panel of economists of the NBER, which is responsible for dating the business cycles in the US, has noted that the nation entered recession in December last year after 73 months of economic expansion since November 2001.
The committee’s word is considered final on this.
The recent collapses include Franklin Bank SSB, Security Pacific Bank, Freedom Bank, Alpha Bank & Trust, Meridian Bank, Main Street Bank, Washington Mutual Bank, Ameribank, Silver State Bank, Integrity Bank, The Columbian Bank and Trust and First Priority Bank.