Illinois, Michigan Banks Fail; Boosts Closings to 15 (Update1) By Alison Vekshin and Ian Katz
Oct. 10 (Bloomberg) -- Banks in Illinois and Michigan were closed by regulators today, boosting to 15 the failures this year, as tightening credit and a deepening housing slump accelerate government action to shore up financial institutions. Meridian Bank of Eldred, Illinois, with $39 million in assets and $37 million in deposits, was closed by the state and the Federal Deposit Insurance Corp. was named receiver. National Bank of Hillsboro, Illinois, acquired the deposits and four branches will reopen tomorrow and one on Oct. 14, the FDIC said. Main Street Bank of Northville, Michigan, with $98 million in assets and $86 million in deposits, was shut by the state and turned over to the FDIC. Monroe Bank & Trust of Monroe, Michigan, acquired the deposits and tomorrow will open the two offices as branches, the FDIC said in a statement. ``The dramatic downturn in the residential real estate market unfortunately knocked the wind'' out of Main Street, Ken Ross, commissioner of Michigan's Office of Financial and Insurance Regulation, said in a statement. Regulators have now closed the most banks in 15 years, and the collapses of Washington Mutual Inc. and IndyMac Bancorp Inc. were among the biggest in history. The deepening housing slump and tight credit led to enactment of a $700 billion bank rescue plan, and triggered a bankruptcy by Lehman Brothers Holdings Inc. and nationalization of Fannie Mae and Freddie Mac. Insurance Fund The FDIC said closing Main Street will cost the deposit insurance fund $33 million to $39 million while closing Meridian will cost $13 million to $14.5 million. The fund had $45.2 billion at the end of the second quarter. In Michigan, Monroe Bank agreed to pay a premium of 1 percent for Main Street's deposits, the FDIC said. Monroe also will buy about $16.9 million in assets and has a 90-day option to acquire $1.1 million additional assets of the failed bank. National Bank will purchase about $7.5 million of Meridian's assets and didn't pay the FDIC a premium for the right to assume all of the failed bank's assets, the FDIC said. The FDIC retains the remaining assets. Meridian's four offices in the Illinois towns of Altamont, Carlyle and Eldred will reopen for normal hours tomorrow, and the Alton office will reopen Oct. 14, the FDIC said. All depositors of Main Street and Meridian will have uninterrupted access to their money, which will continue to be insured, the FDIC said. Deposit Premiums The FDIC insures deposits of up to $250,000 per depositor per bank and a similar amount for some retirement accounts at 8,451 institutions with $13.3 trillion in assets. The agency is doubling the premiums banks pay to replenish the reserves amid forecasts failures through 2013 will cost almost $40 billion. Washington Mutual, the biggest savings and loan, sold its assets to JPMorgan Chase & Co. Sept. 25 after customers drained $16.7 billion in deposits in less than two weeks. Wachovia Corp., the sixth-biggest bank, agreed to be acquired by Wells Fargo Co. for $11.7 billion, trumping an FDIC-brokered sale of banking operations to Citigroup Inc. The FDIC is running a successor to California lender IndyMac Bancorp, closed in July in the fourth-largest bank seizure, and easing mortgage terms for more than 1,200 borrowers. The failure drained more than 10 percent from the U.S. insurance fund. `Problem' Banks The agency in August said 117 banks were classified as ``problem'' in the second quarter, a 30 percent jump from the first quarter. The agency doesn't name the ``problem'' lenders. Before today's action, 39 banks failed since October 2000, according to a list at fdic.gov. Regulators this year also closed Ameribank in Northfork, West Virginia, on Sept. 19; Silver State Bank of Henderson, Nevada, on Sept. 5; Integrity Bank of Alpharetta, Georgia, Columbian Bank and Trust of Topeka, Kansas, and First Priority Bank of Bradenton, Florida, in August; Reno-based First National Bank of Nevada and Newport Beach, California-based First Heritage Bank in July; Staples, Minnesota-based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January. To contact the reporters on this story: Alison Vekshin in Washington at [EMAIL PROTECTED]; Ian Katz in Washington at [EMAIL PROTECTED] --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
