More US Banks Shut Down
The Federal Deposit Insurance Corp. has recently shut down three more banks in the US including Kansas, Colorado, and Georgia. According to some experts, more financial institutions are facing possible meltdown due to prolonged recession, warning that government should act quickly so solve this looming financial crisis.
Bank regulators have shut down three banks in Georgia, Colorado, and Kansas which added to the growing number of failed banks which has experienced meltdown due to prolonged recession.
According to reports, there are over 20 banks which have already been closed down a couple of months ago following the credit crunch incident and the collapse of housing industry which paved way to the global economic recession.
Meanwhile, the Federal Depositor Insurance Corp. (FDIC), a government agency which overlooks the three failed banks, said the closing of these financial firms will cost around $207 million. The FDIC also said that US banks lost more than $26 billion last month, adding to the $32.1 billion losses during the last quarter of 2008. With this incident, the financial sector’s net income fell to $10.2 billion last year from $16.1 billion in 2007.
According to the department’s estimate, bank failures will cost the insurance fund nearly $65 billion for the next four years.
Analysts believe that bank failures is a result of many factors including weak economy, record-high unemployment rate, housing industry collapse, and feeble market. According to a recent study, the banking system has reached the lowest level for decades, slumping to $18.9 billion in 2008 from $52.4 billion from the previous year.
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