U.S. sees 14 bank failures on average in every month of 2010

PTI


Official data shows that 125 banks have collapsed this year; seven went out of business this month

In signs of persisting financial woes in the world’s largest economy, a whopping 125 American banks have bitten the dust in just nine months.

On average, 14 banks went belly up in every month of 2010 and the total failures are expected to surpass last year’s figure of 140.

The number of ‘problem’ banks, those which are at risk of failure, soared to 829 in the June quarter, the highest in 17 years.

The latest official data shows that 125 banks have collapsed this year and out of them, seven went out of business in September.

Last Friday, authorities shut down six entities - Bank of Ellijay, ISN Bank, The Peoples Bank, Maritime Savings Bank, Bramble Savings Bank and First Commerce Community Bank.

According to the Federal Deposit Insurance Corporation (FDIC), these failures would cost the federal agency more than $ 347 million. FDIC insures deposits at over 8,000 U.S. banks.

Small and medium banks were the most badly hit, with soaring unemployment levels resulting in increased defaults.

Despite stimulus measures and incentives for the labour market, the jobless rate stood at 9.6 per cent in August.

In August, 10 banks closed down, while the collapses were much higher at 22 in July. The highest number of collapses this year happened in April, when 23 entities went belly up.

“Without question, the industry still faces challenges. Earnings remain low by historical standards and the number of unprofitable institutions, problem banks and failures remains high...,” FDIC chairperson Sheila C. Bair had said in August.