Regulators closed banks in California, Maryland and Minnesota at the weekend, pushing United States bank failures to 84 this year amid continuing fallout from the recession.
The Federal Deposit Insurance Corporation (FDIC) was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of LakeForest, Minnesota, after the closings. Assets of US$1.9 billion ($2.7 billion) and deposits of US$1.7 billion were turned over to new lenders at a cost of about US$446 million to the FDIC's deposit insurance fund.
Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real-estate debt. A total of 416 banks with combined assets of US$299.8 billion failed the FDIC's grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994.
The FDIC insures deposits at 8195 institutions with roughly US$13.5 trillion in assets and reimburses customers for deposits of up to $250,000 per account when a bank fails. The surge in failures has depleted the Washington-based regulator's deposit insurance fund, which fell to US$10.4 billion at the end of June from US$13 billion in the previous quarter, the agency said.
FDIC chairman Sheila Bair is likely to levy another fee this year to replenish the deposit insurance fund. The agency has already raised US$5.6 billion through an added assessment and has the authority to levy two more before the end of the year.
The collapses of Bradford and Mainstreet brought down lenders with roots reaching back more than a century, according to their websites. The FDIC extended from three to seven years the time new banks must maintain higher capital levels and face more frequent examinations.
