With a Rush of Bank Failures, Is Illinois the "New Georgia"?

With a Rush of Bank Failures, Is Illinois the "New Georgia"? - 7/6/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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With a Rush of Bank Failures, Is Illinois the "New Georgia"?
Kevin LaCroix

The D & O Diary. July 6, 2009
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EXCERPT: This past Thursday night, the FDIC closed seven additional banks, including six in Illinois alone. These latest closures bring the number of year to day bank failures to 52, already double the 26 bank closures during all of 2008. The FDIC has closed twelve banks in just the last two weeks. […] The 2009 bank failures have been spread across 18 different states, but certain states have experienced a high bank closure concentration. Up until now, Georgia had the dubious distinction of leading the way, having been dubbed the “bank failure capital of the world” earlier this year. But with the latest closures, the state with the highest number of bank failures this year is now Illinois, where twelve banks have now failed, compared to nine so far this year in Georgia. California has had six and Florida just three. There are a number of reasons for the surge of Illinois bank failures, as discussed at length in a July 2, 2009 American Banker article entitled “The Next Georgia? Failures Spike in Illinois”. It is probably worth noting that this American Banker appeared before the six bank closures were announced after the close of business on Thursday evening. Among other things, the number of Illinois bank closures may simply be the “law of numbers.” According to the American Banker article, Illinois, which was one of the last states to allow branch banking, has more banks than any other state, with 652 institutions headquartered there, compared to Georgia, which has only half as many. The real estate downturn is also part of the explanation, as it is in other states, but another reason for the particular problems in Illinois is challenge many of these banks are having with their investment portfolios.

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