State regulators shut down four banks Friday, the Federal Deposit Insurance Corporation said.The price tag so far this year: $13.4 billion. Remember that next time one of the TARP recipient megabanks posts a couple billion in quarterly profits. Dozens more small and medium banks will be consumed by larger banks, becoming regional banks that operate in multiple states. Larger regional banks will eventually consume these smaller regional banks to become super-regional or national banks. National banks will consume regional banks to become the only game in town.The bank were: First Piedmont Bank, based in Winder, Ga.; BankFirst, based in Sioux Falls, S.D.; Temecula Valley Bank of Temecula, Calif.; and Vineyard Bank of Rancho Cucamonga, Calif.
Friday's actions bring the total number of closings for 2009 to 57.
Georgia has claimed 10 of the casualties this year, more than any other state, according to David Barr, spokesperson for the FDIC.
State regulators shut down the four small, regional banks and named the FDIC the receiver.
The forced consolidation of the banking industry as the survivors rush to gain "Too Big To Fail" status will not exactly help the consumer, folks. It will only make it much, much more likely that the next financial crisis caused by derivative shell games and securitized financial instrument three-card monte to actually become the worst-case scenario as the global economy breaks down.
Banks will continue to fail for years, folks. Assets will go to larger banks, liabilities will be paid for by your tax dollars. Those assets will be used to play more games with money, to re-leverage the industry to the point where it's wound tight enough to break again. Moral hazard created by the knowledge that if you're big and powerful enough you can't lose will only lead to riskier deals and higher and higher leverage ratios.
Only, when the spring snaps next time on the Money Machine, there will be no fixing it.
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