This Week's Busted Banks

We've hit the 125 mark on the way to eclipsing last year's 140 as more and more community banks are collapsing across the country.

Banks in Georgia, New Jersey, Ohio and Wisconsin were closed by regulators, according to statements posted yesterday on the website of the Federal Deposit Insurance Corp., which was named receiver. This week’s failures cost the agency’s deposit- insurance fund $347.6 million.

“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage,” the FDIC said in each of the statements.

Banks are failing at a faster pace than last year, which saw the most failures since 1992, as real estate values remain depressed and economic recovery stays sluggish. Regulators closed 140 banks last year. The FDIC’s list of “problem” banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7 percent increase from the 775 on the list in the first quarter, the FDIC said last month. 

We've seen 280 banks fail during this Great Recession.  Odds are pretty good we'll see 300 soon, possibly 350 before the end of the year.  There will be more bank failures in 2011 as commercial real estate continues to collapse, office space remains unsold, and business loans are defaulted upon.  The era of the local, commercial bank is ending right before our eyes, replaced by Too Big To Fail.

That's a damn shame.