Bank failures tripled in a year
The number of U.S. banks shut to date in 2009 is triple the number that failed in 2008, government regulators said.
Most of the banks that failed this year are small, regional banks that fell victim to losses on real estate and consumer loans when unemployment surged to a 25-year high. However, many large institutions closed in 2009, a Federal Deposit Insurance Corporation spokesman said.
The cost to FDIC of closures on Friday alone was about $446 million, CNN reported.
The FDIC said more failures are expected and experts are questioning whether the FDIC’s insurance fund can handle it. The number of problem banks is 416 in the most recent quarter, the highest in 15 years.
The trust fund needed to bail out the banks shrunk by $2.6 billion, or 20 percent of its total, during the quarter to $10.4 billion.
The FDIC anticipates roughly $70 billion in losses during the next five years due to the failure of insured institutions.