Money Matters, Simplified.
Bank failure tally touches 94
by Jaspreet Kaur - September 20, 2009 - comments
With the increasing number of bank failures in the country, the FDIC's fund is on a decline
Columbus, September 20 -- More financial trouble seems to be in sight as the Federal Deposit Insurance Corp. (FDIC) reported that regulators have shut down two subsidiaries of Irwin Financial Corporation in Kentucky and Indiana on Friday. That brings this year’s bank failure count to 94.
The two subsidiaries were namely the Irwin Union Bank and Trust Company in Indiana and Irwin Union Bank, F.S.B. in Kentucky. Both the subordinate banks used to run a combined total of 27 branches in nine U.S. states.
The Irwin Union Bank and Trust had total assets amounting to $2.7 billion and total deposits of approximately $2.1 billion. On the other hand, the Irwin Union Bank had total assets of $493 million and total deposits of around $441 million.
Bank transactions to continue as before
However, the customers of the bank do not need to worry. All the deposits of the two banks will now be taken over by the First Financial Bank, NA, which is based in Hamilton, Ohio.
Claude Davis, president and chief executive officer of First Financial, said in a statement, “Since all deposits are being assumed by First Financial Bank, there will be no losses to any depositor.”
The FDIC revealed that the customers of the failed banks will be able to have access to their money over the weekend by writing cheques or using ATM or debit cards. The processing of cheques will continue and borrowers need to make their payments as they were doing before.
FDIC’s fund on a decline
The FDIC has been insuring bank deposits since the Great Depression and presently covers customer accounts up to the sum of $250,000.
The FDIC’s insurance fund has been reduced to a meager $10.4 billion from $45 billion a year ago, all thanks to the number of rising bank failures. But the agency said that it still has $42 billion on hand for bank rescues over the next 12 months.
The last two bank closures have cost the FDIC an estimated $850 million.
Bank regulators will be holding a meeting at the end of this month to find out ways to refill the agency’s funds. They will also be discussing on the possibility of borrowing from the U.S. Treasury, said FDIC Chairman Sheila Bair.
The number of banks that have failed this year is 94. This means an average of almost 10 banks were closed every month. This tally is almost four times more than the number of banks that failed in 2008, and it is the maximum since 1992, when 181 banks failed.