Just when you thought the banks are getting better.
Regulators shut down another seven banks with a total of $1.5 billion in assets. The failed banks count stand at 52 already and July just started! To make matters worst, everyone continues to predict further downfalls as unemployment will cause additional loan defaults in both residential and commercial mortgages. Another interest stat, seven banks in one week breaks the record of the most bank failures during this banking crisis. The previous record? Five set a week earlier!
Of course, this is nothing new to us. Massive reduction in capital due to write offs in collateralize mortgage obligations (CMOs), commercial loans, residential loans among others. The seven that failed:
- Elizabeth State Bank
- First National Bank of Danville
- First State Bank of Winchester
- Founders Bank
- Millennium State Bank of Texas
- Rock River Bank of Oregon
- The John Warner Bank of Clinton
RIP banks!
The FDIC were put in charge of the banks and it estimates that the total cost is going to be $314 million for these seven banks. We will have to wait until they report their fund level again but you can bet that it’s lower than the $13 billion they announced at the end of the first quarter.
Oh well. Keep them coming and purge the system quick!