This Week's Busted Banks

The FDIC has closed seven more banks this week, bringing the total through the first eleven weeks of 2010 to a whopping 37.

The Federal Deposit Insurance Corp. took over First Lowndes Bank, in Fort Deposit, Ala.; Appalachian Community Bank in Ellijay, Ga.; Bank of Hiawassee, in Hiawassee, Ga.; and Century Security Bank in Duluth, Ga.

The agency also closed down State Bank of Aurora, in Aurora, Minn.; Advanta Bank Corp., based in Draper, Utah; and American National Bank of Parma, Ohio.

The FDIC was unable to find a buyer for Advanta Bank, which had $1.6 billion in assets and $1.5 billion in deposits. The regulatory agency approved the payout of the bank's insured deposits and it said checks to depositors for their insured funds will be mailed on Monday.

The failure of Advanta Bank is expected to cost the federal deposit insurance fund $635.6 million.

Absolutely we're on pace to break last year's 140 busted banks in 2010.  We're well ahead of schedule and the pace will only pick up as the CRE collapse accelerates.  The most depressing part of this:

The FDIC expects the cost of resolving failed banks to grow to about $100 billion over the next four years.

That means the FDIC is expecting hundreds of busted banks over the next few years, all at taxpayer expense.  But the Republicans (and especially the Paulite Wingers) would have you believe the problem was that these banks were regulated too closely.  A great many of the banks that will fail will be local savings and loans that don't have Washington lobbyist connections, and that means local lenders, the keys to small business creation and continuing credit, are going to vanish.  The megabanks aren't going to bother giving loans to these small businesses when they can invest their money in larger enterprises with larger returns, or can manipulate Congress to let them gamble on securitized products.

They don't have to resort to lending to car washes and PC repair shops and diners.  They can lend to big box chains, other banks, or simply invest and spin the big wheel of fortune.  As I've said time and time again, these busted banks will hurt the bottom line of where you live.  Less competition, fewer employers, fewer jobs.

The forced consolidation of the banking industry into nothing but the megabanks continues apace.