Credit Material » As Regulators Shut Down Seven More US Banks, Total Reaches 52.

As Regulators Shut Down Seven More US Banks, Total Reaches 52.

Posted on July 5, 2009

Total number of failed U.S. banks has reached 52 during the year 2009 as seven more banks have been shut down by the bank regulators, this Thursday.

During the 2008-2009 banking crisis this was the largest number of bank failures in one week, it has exceeded the previous record which was five bank failures in a week and that record has been set just last week.

The Street .com’s recent list of 89 undercapitalized banks and thrifts had included all of the seven failed banks. All the five banks that failed last week were also included in that list.

In an unusual twist, the headquarters of six of Thursday’s seven failed banks were in Illinois, and all these six failed banks were subsidiaries of holding companies that are in a private control of the Campbell Group, through what it was described by David Barr, the spokesman of FDIC described as “fairly complex layers of ownership.”

Similar business strategies have been followed by all six of the failed Illinois banks. They were all having heavy concentrations in collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans. All six have faced the removal of their capital from losses on the CMOs, few of which were in default, as well as loan losses.