[OPE] Towards the 100th bank bankruptcy in the US: the big fish eat the little fish

From: Jurriaan Bendien <adsl675281@telfort.nl>
Date: Sun Sep 20 2009 - 15:44:54 EDT

In the U.S. soon the 100th bank will go bankrupt
Die Welt 20 September 2009

In the U.S., not a week goes by without a bank collapsing. And the mark of
the 100th bankruptcy this year is fast approaching. With two more collapses,
the number rose to 94 at the weekend. Usually the U.S. deposit insurance
fund FDIC has to step in, but its resources are dwindling. With the most
recent closures, the pressure on the FDIC deposit insurance authority
http://www.fdic.gov/ is growing. FDIC chief Sheila Bair did not rule out
that the Authority needs to borrow more money from the government.

The Irwin Union Bank from the U.S. state of Kentucky and the Irwin Union
Bank and Trust Company of Indiana are the latest to get hit it. Their
respective total assets were $934 million and $4.8 billion. Both
institutions are being taken over by the First Financial Bank of Ohio, which
limits the cost to the deposit insurance fund. However, the FDIC had to
agree to take on liability in the event of losses of $2.5 billion.

Since not a week goes by without a bank failure, and the FDIC has to step in
usually with at least several hundred million U.S. dollars, the funds of the
deposit insurance authority are dwindling. According to latest official
figures, at the end of the first half year they stood at 10.4 billion U.S.
dollars. But since that time the FDIC was forced to close about 50 banks.
Ms. Bair said according to U.S. media reports that the Authority was
considering various options to replenish the security fund, including access
to a government credit line. The FDIC can borrow up to 500 billion U.S.
dollars from the U.S. Treasury. Possibly, however, bank contributions to the
fund would also increase.
(my translation)

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Received on Sun Sep 20 15:47:40 2009

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