both TonyRo76 and LasVegasDave.
Also seized by the FDIC on Friday were three Georgia banks: Buckhead Community Bank, based in Atlanta, with $874 million in assets and $838 million in deposits; First Security National Bank, based in Norcross, Ga., with $128 million in assets and $123 million in deposits; and Tattnall Bank, of Reidsville, Ga., with assets of $49.6 million and deposits of $47.3 million.
Benchmark Bank, based in Aurora, Ill., with $170 million in assets and $181 million in deposits, also was closed, as was Greater Atlantic Bank, of Reston, Va., with $203 million in assets and $179 million in deposits.
The failure of Buckhead Community Bank is expected to cost the federal deposit insurance fund an estimated $241.4 million; that of First Security National Bank, around $30.1 million; Tattnall Bank, $13.9 million; Benchmark Bank, about $64 million; and Greater Atlantic Bank, $35 million.
The three shutdowns in Georgia brought to 24 the number of bank failures in that state so far this year. Benchmark Bank was the 20th to fail in Illinois. Failures also have been concentrated in California and Florida.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It has fallen into the red.
The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.
Depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. The FDIC still has about $21 billion cash in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.
If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks hold large concentrations of these loans. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.
The 130 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $28 billion so far this year. They compare with 25 last year and three in 2007
I don’t know what to make of this news. Having been through the Depression (1929) my parents are a little panicky. They have taken a considerable amount out of their bank and have it in safe keeping. I , personally, am not sure what to do. What do you folks think?