NEW YORK: The American economy
may have witnessed quarterly expansion, but the count of bank failures are soaring and a staggering 115 entities have
Indicating that the nation's financial system continues to remain jittery, the bank failures in 2009 have witnessed a four-fold rise from that of last year, when just 25 went belly up. The authorities closed down nine banks on October 30. They are Bank USA, Community Bank of Lemont, San Diego National Bank, California National Bank, Pacific National Bank, Park National Bank, Citizens National Bank, Madisonville National Bank and North Houston Bank
.
According to the Federal Deposit Insurance Corporation (FDIC), which insures deposits of over 8,000 American banks, these collapses would cost its Deposit Insurance Fund about USD 2.5 billion.
The nine banks had combined assets worth USD 19.4 billion and deposits of USD 15.4 billion, as on September 30.
Moreover, the collapse of 115 banks so far this year is the highest for any year since 1992, when 181 entities were shut down, in the wake of the savings and the loan crisis.
Even as the economic activities is slowly picking up, the bank failures are anticipated to climb in the coming months, mainly due to higher unemployment resulting in increased defaults.
After four straight quarters of contraction, the US GDP expanded 3.5 per cent for the three months ended September.
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