Bank Failures Continue to Mount

As of November 20, a total of 124 U.S. banks have been closed by regulators. That's the highest total since 1992, when 181 banks failed at the tail end of the S&L crisis.

An average of 11 banks per month have failed this year. Just 25 banks failed last year, and only three in 2007.

The 124 closings have cost the FDIC's insurance fund more than $28 billion this year. The fund's balance went negative as of the end of the third quarter.

The FDIC estimates that the total cost of failures will be $100 billion from 2009 through 2013.

The number of banks on the FDIC's "problem list" stood at 416 at the end of June. The agency will hold a briefing next week to reveal how many banks are currently on that problem list.

The FDIC says that bank failures will remain elevated through next year. Experts suggest we could be no more than 10% of the way through this cycle of bank collapses.

CreditSights, which tracks bank failures, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets.

Most of the troubled banks are concentrated at the regional and community level, and are weighed down by commercial real estate and construction loans.

Between now and 2012, more than $1.4 trillion worth of commercial real estate loans will come due, according to real estate investment firm ING Clarion Partners.

However, the collateral value underlying many of these loans is depreciating. That means many borrowers will have trouble rolling over their loans.

"Another wave of prolonged losses driven by weakness in commercial real estate could prove catastrophic to many of these weakened banks," CreditSights said.

The banking system has deteriorated considerably since last fall. Banks that regulators deemed healthy only months ago have started to fail.

This month, three banks that received taxpayer money have failed. The three received a total of $2.63 billion from the $700 billion financial bailout program. All of that taxpayer money will likely be lost.

When the TARP legislation was enacted last October, then-Treasury Secretary Henry Paulson said, "there is no reason to expect this program will cost taxpayers anything."

In all, more than two dozen banks that received taxpayer money have faced regulatory actions, suggesting they are not stable and could fail. All were deemed "healthy banks" when that money was granted.

More than $5 billion in taxpayer money could be lost, depending on which of these shaky banks survive.

Hold on to your hats, your checkbooks, and your wallets; the worst is yet to come.