69 US banks go belly up in 2009, 24 fail in July

NEW YORK: Bank failures in the US are increasing by the day, with an average of ten entities going belly up every month, taking the toll to 69 so far this year.

With five more banks collapsing on July 31, a staggering 24 entities were shut down last month, the highest for any month in 2009.

Moreover, the number of failures till the end of last month, 69, is more than double that of last year, 25.

Even as the economy is slowly showing signs of recovery, regional and small banks are bearing the brunt of the recession, primarily on account of increasing defaults due to rising unemployment.

The latest ones to collapse last Friday are First State of Altus, Integrity Bank, Peoples Community Bank, First Bankamericano and Mutual Bank, according to the Federal Deposit Insurance Corporation (FDIC), which is often appointed receiver of failed entities.

The failures of the five banks would cost the FDIC nearly USD 912 million.

Seven banks each were closed down on July 2 and July 24. The authorities closed down nine banks in June and seven in May. There were ten bank failures in February.

The world's largest economy is reeling under one of the worst financial turmoils since the 1930s.

The FDIC recently said the number of "problem banks" in the US has risen to a 15-year high of 305 in the first quarter of 2009 against 252 in the December quarter last year.

However, the American economy is on the path of stabilisation, with GDP contracting much less than expected at one per cent in the second quarter of 2009.

The latest Beige Book, which provides a snapshot of the economic situation in various districts, showed that economic activities are slowly stabilising.

The crisis became deep with the bankruptcy of financial services entity Lehman Brothers in September last year.

Since then the Federal government has embarked on unprecedented measures such as the mammoth USD 787-billion stimulus package, to bolster the nation's sagging economy.

Among the banks which went under this year are Founders Bank, Temecula Valley Bank, Waterford Village Bank, Vineyard Bank and Millennium State Bank of Texas.