US Bank Failures Up

  American bank failures are accelerating.Three, two weeks ago, five the week before last and then a huge seven on Thursday ahead of the holiday weekend.That took & #160;the tally of failed banks for this year & #160;to 52, more than double the 25 failures in 2008. Three failed in 2007Six regional banks in Illinois and one in Texas closed their doors, according to the Federal Deposit Insurance Corporation.The rash of Illinois failures are interlinked, according to the FDIC statement. & quot;The six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution.The Chicago Tribune reported that the Illinois banks were controlled by & #160; & quot;the Campbell family, whose Campbell Group operates nine banks in Illinois. & quot; & quot;Founders Bank had gone on a search to try to raise about & #36;50 million in capital after suffering securities losses in the first quarter and falling to an & quot;undercapitalized & quot; status, & quot; the paper reported. & quot;The failure of these banks resulted primarily from losses related to the banks' investment in collateralized debt obligations and other loan losses, & quot; the FDIC said.It was & #160;a reminder that the subprime crisis and its creatures, CDOs still have the power to hurt consumers, banks and balance sheets. & #160;Twelve banks in Illinois have failed this year.Thursday's failure in Texas was the first for the state in 2009.Not a single bank or thrift failed in Illinois between July 2002 and September 2008. & #160;But the record number of one-day failures came March 16, 1989, when 10 Illinois thrifts were taken over by regulators.Local banks have been hard hit as plummeting home values devalued mortgage-backed assets and rising unemployment rates caused an increasing number of consumers to default on their loans.Larger financial institutions have been helped with government bailouts, but smaller regional and local banks continue to struggle.The total cost of the seven & #160;bank failures to the FDIC will be around & #160; & #36;US314.3 million, bringing the FDIC fund's total cost for failed banks to & #36;US12.3 billion this year.That compares with & #36;US17.6 billion in all of 2008.The FDIC, which is funded primarily by fees paid by banks, insures individual deposits up to & #36;250,000. The amount was increased from & #36;100,000 late last year in response to concerns about the stability of the nation's banks.The sequence of collapses went like this, according to the FDIC:First bank fails: State regulators shut John Warner Bank, based in Clinton, Illinois.Second bank falls: Later Thursday, state regulators closed First State Bank of Winchester, Illinois.Third bank falls: Rock River Bank, based in Oregon, Illinois, was shut by state regulators.Fourth bank & #160;collapses: Elizabeth State Bank, based in Elizabeth, Illinois.Number five was & #160;The First National Bank of Danville, headquartered in Danville, Illinois.Number six saw state regulators shut down the Millennium State Bank, based in Dallas, Texas.And, finally, the biggest, & #160;Founders Bank, based in Worth, Illinois was shut late Thursday.Founders Bank had total assets of & #36;US962.5 million and total deposits of & #36;US848.9 million. & #160;  

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