Friday evening at the FDIC - two bank failures

It was a typical week at the FDIC. Friday evening the FDIC announced that two banks were closed this past week:

1. Heritage Community Bank, Glenwood, Illinois. MB Financial Bank, N.A., Chicago, Illinois assumed all of the deposits.
2. Security Savings Bank, Henderson, Nevada. Bank of Nevada, Las Vegas, Nevada, assumed all of the deposits.

That brings to 16 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