subject: Four More Banks Fail in 2010 While Real Estate Recovery Struggles [print this page] Four More Banks Fail in 2010 While Real Estate Recovery Struggles
Americans looking for choices in banking are going to find it a little tougher to find options as of this month. Topping last year's 140 bank closures, the recent situation with an additional 4 failed banks brings the number of failed banks this year to 143. Many of the hardest hit states of these bank closures are the same ones that are hardest hit with the real estate crisis since the recession began, including California, Florida, Georgia, and Illinois.
The following banks were the most recent additions to the pile of failed banking institutions in the US for this year:
K Bank with $538.3 million in assets
Pierce Commercial Bank with $221.1 million in assets
Western Commercial Bank with $98.6 million in assets
First Vietnamese American Bank with $48 million in assets
Most of the banks that have failed this year are smaller financial businesses than the bank failures that consumers saw last year. The smaller size of failed banks that have occurred this year have resulted in smaller losses for the deposit insurance fund; unfortunately this bill still has reached over $21 billion so far this year, making the losses for 2009 and 2010 a whopping $57 billion dollars to date. The Federal Deposit Insurance Corp estimates costs for the next four years to escalate to about $31 billion, creating even more problems for the FDIC which is already in the red since last June.
Many of the areas that were previously serviced by these failed institutions are also heavily affected by high rates of home and commercial vacancies and foreclosures, as well as sky-high unemployment rates, and floundering consumer spending. Failing businesses in these areas are contributing to bank failures in a big way due to a combination of lagging employment opportunities and increased numbers of commercial foreclosures as businesses succumb to the struggling economy.
Because the economy has yet to recover enough to support an increase in consumer spending, more foreclosures are likely on the way which does not bode well for the banking institutions still in business. Economic recovery is an intricate web that will require a variety of different areas of support to recover together so that they can support each of the other areas.
