Saturday, December 19, 2009

Bank Failure Tally Reaches 140

Seven banks across six states were shut down on Friday, bringing the total number of failed banks this year to 140.

Friday's closures will cost the FDIC an estimated $1.7 billion.

An average of 11 banks have failed every month this year. The spike in failures has raised concerns about the FDIC's deposit insurance fund, which has slipped into the red for the first time since 1991.

This year's tally of bank failures is the highest number since 1992, when 181 banks failed. But the total is far from 1989's record high of 534 closures which took place during the savings and loan crisis, when the insurance fund also carried a negative balance.

FDIC Chair Sheila Bair told CNBC that bank failures will continue to accelerate into next year despite "some encouraging signs" that things are turning around for the battered industry.

The continuing bank failures will be driven by unusually high unemployment that is expected to lead to more foreclosures and other commercial loan failures.

So far, the total cost of these 140 failures to the FDIC fund is more than $30 billion.

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