by Ronald Louis Peterson

Created on: October 31, 2009   Last Updated: November 09, 2009

Bank Closings 2009: 106 and Counting

A total of 106 banks in the United States have failed this year as of October 23 and experts forecast some 400 more struggling banks will likely follow them in the next several years. According to the Federal Deposit Insurance Commission (FDIC) the current closings have cost it about $25 billion in payments to depositors and other debtors. This amount is expected to increase over the next four years to an estimated $100 billion thanks to anticipated bank closings.

The causes for the closures are really no surprise. Delinquent loans, relaxed credit, high unemployment, and the housing bust all contributed and proved to be too much for these banks to handle all at once. And, while the FDIC appears to be managing the bank failures well, its Chairwoman Sheila Bair said its insurance fund probably won't be back in the black for at least another three years due to the ongoing closures. [1]

To put this sad situation in perspective, the last time we've seen numbers like these was in 1992 during the savings-and-loan calamity. That year 120 banks collapsed as that financial emergency was abating. Three years before, in 1989, 534 banks failed at the height of the savings and loan meltdown. In case you are wondering, 11,000 of 25,000 banks in the United States failed between 1929 and 1933 during the Great Depression. [2]

No part of the country has been spared in our Great Recession of 2009. Banks of all sizes in urban and rural areas across the country have closed their doors this year. But some places have been harder than others as this expanding list of failed banks documents: http://www.fdic.gov/bank/individual/failed/banklist. html

Bank Closure Process

Each failed bank customer receives a mailed notification from the FDIC immediately upon their bank's closure. It will either state that their account has been purchased by another bank or that the FDIC will send them a check in the mail for their account's balance. In either case, virtually all banks and their deposits are backed by the FDIC and each of these accounts is insured for up to $250,000.

Strategies for Insuring Your Money

While deposits in separate branches of an FDIC member bank are not separately insured, deposits maintained in different categories of legal ownership at the same bank are each insured for up to $250,000. These categories include checking, NOW, savings accounts, money market deposit accounts (MMDA), and time deposits such as certificates of deposit (CDs).

• 1
• 2
• Next Page >>