Three More Banks ClosedTwo in CA., One in GA., Nine Altogether so Far in 2009 Three more banks failed on Friday, bringing the total number of banks that have failed so far in 2009 to nine. Two banks in California -- County Bank, Merced, and Alliance Bank, Culver City -- were closed by the California Department of Financial Institutions. FirstBank Financial Services, McDonough, GA was closed by the Georgia Department of Banking and Finance. The Federal Deposit Insurance Corporation (FDIC) was appointed receiver of the three banks. The FDIC found other banks to assume the deposits of the three failed banks.
Westamerica Bank, San Rafael, CA bought all the deposits of County Bank. The County Bank's 39 offices were reopened on Saturday as branches of Westamerica Bank. County Bank had assets of $1.7 billion and total deposits of $1.3 billion. The cost of Westamerica Bank's acquisition of County Bank will cost the FDIC's Deposit Insurance Fund $135 million.
California Bank and Trust, San Diego, CA, bought all the deposits of Alliance Bank. The bank's five offices are now branches of California Bank and Trust. Alliance had assets of $1.14 billion and total deposits of $951 million. California Bank & Trust also bought $1.12 billion in assets at a discount of $9.9 million. The cost to FDIC's Deposit Insurance Fund will be $206 million. Alliance Bank and County Bank are the second and third banks to fail in California in 2009.
FirstBank Financial Services, McDonough, GA had all of its deposits bought by Regions Bank, Birmingham, AL. FirstBank was closed by the Georgia Department of Banking and Finance. FirstBank's four offices are now branches of Regions Banks. FirstBank had assets of $337 million and total deposits of $279 million. Regions Bank also bought $17 million of the failed bank's assets. The FDIC will retain the remaining assets from the three banks for later disposition. The cost to the FDIC's Deposit Insurance Fund of FirstBank's closing will be $111 million. FirstBank is the first bank in Georgia to fail in 2009.
Treasury Postpones Rescue Plan Until Tuesday
The Treasury's new financial rescue plan, which will be unveiled Tuesday, will include creating incentives for private sector investment in troubled banks.
Larry Summers, President Barack Obama's chief economic advisor, says it won't be all private capital, but with the right types of government guarantees, financing and strategic approaches, Treasury Secretary Timothy Geithner hopes to bring in substantial private capital.
One area being looked at is the creation of a "bad bank," or aggregator bank that would buy illiquid mortgage securities. The bank would be partly funded by remaining money from the Troubled Asset Relief Program, but a greater portion would come from private investment. The Treasury also says it plans to guarantee mortgage securities, give new capital injections into financial institutions and help out troubled mortgage holders near foreclosure, as well as push further a consumer lending program. Obama and his economic team are now focusing on getting a massive stimulus package passed in the Senate.