Bank Failures, Banks | featured news

The FDIC said the number of distressed banks in the U.S. rose to the highest level in 16 years, and the insurance fund to protect depositors swung to a negative balance.

A California-based bank that focused on the Chinese-American market was the largest of five failures on Friday that cost U.S. taxpayers more than $1.5 billion.

CIT, the troubled American bank, is offered a $6bn rescue loan from investor Carl Icahn as it tries to avoid bankruptcy.

Under the agency's proposal, institutions would prepay three years' worth of premiums to the fund that insures customer deposits in case of bank failure.

Federal regulators today proposed borrowing $45 billion from the nation's banks to help rebuild the fund that insures customer deposits as an increasing number of failures threaten to drain the fund's reserves.

Regulators shut down two banking units of Irwin Financial Corp. Friday, marking the 93rd and 94th failures this year of federally insured banks.

The Federal Deposit Insurance Corp. was appointed receiver of Louisville, Ky.-based Irwin Union Bank FSB and Columbus, Ind.-based Irwin Union Bank and Trust Co.
As of Aug. 31, Irwin Bank FSB had $493 million in assets and $441 million in deposits, while Irwin Union Bank and Trust had $2.7 billion in assets and $2.1 billion in deposits.

When the credit crisis struck last year, federal regulators pumped tens of billions of dollars into the nation's leading financial institutions because the banks were so big that officials feared their failure would ruin the entire financial system. Today, the biggest of those banks are even bigger.

FDIC sells assets to BB&T in biggest failure of the year. The troubled Colonial BancGroup, unable to raise capital and facing a federal criminal probe of its accounting practices, was closed by regulators Friday in the largest bank failure of 2009.

U.S. regulators closed seven small banks on Friday, a pace matching a one-day total seen earlier in July and bringing the number of failures so far this year to 64.

Regulators on Friday shut two banks in California and two smaller banks in Georgia and South Dakota, boosting to 57 the number of federally insured banks to fail this year.

The largest bank failure so far in 2009 is also notable because the failed bank's buyer is a consortium of private-equity firms. BankUnited, FSB, based in Coral Gables, Fla., was closed by the Office of Thrift Supervision on Thursday, and the Federal Insurance Deposit Corporation was appointed receiver.