Saturday, February 07, 2009

Friday evening at the FDIC - three more bank failures

Friday evening the FDIC announced three more bank failures:

  1. Alliance Bank, Culver City, California. California Bank & Trust, San Diego, California, assumed all of the deposits of Alliance Bank.
  2. FirstBank Financial Services, McDonough, Georgia. Regions Bank, Birmingham, Alabama, assumed all of the deposits of FirstBank Financial Services.
  3. County Bank, Merced, California. Westamerica Bank, San Rafael, California, assumed all of the deposits of County Bank.

That brings to 9 the number of failed banks in 2009.

The FDIC does not give any advance notice of bank closures. In fact, it is usually a state banking regulator who does the closure and then FDIC is "named receiver" and then takes over and promptly arranges to sell as much deposits and assets as it can to a healthier bank.

The basic idea is to totally avoid old-fashioned "runs" on banks and pre-arrange the assumption of deposits by a healthy bank before the closure is even announced. In other words, there should be no disruption of service and no need for customers to lose any sleep.

-- Jack Krupansky


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