Bank closure rundown

May 6th, 2009 at 11:42am Alex Gary

Bank regulators seized three more banks on May 1, raising the total for the year to 32.

One of the three closed was Silverton Bank of Atlanta. Georgia leads the U.S. this year with five closings, California has had three shut down and Illinois 3. Fifteen states total in 2009 have had at least one bank closed.

The seizure of the Silverton Bank was interesting because for the third time this year the FDIC was unable to find a bank willing to take it over. Since 1982, the FDIC basically had engineered takeovers for every single bank it has closed. But just since April 1, it was unable to auction off New Frontier Bank in Greeley, Colo., First Bank of Beverly Hills in Calabasas, Calif. and now Silverton Bank in Atlanta.

That’s an even worse trend for the economy. Typically, as long as the FDIC finds a bank to take over a failed institution, the vast majority of jobs at those banks stick around. The new owners need people to run the branches. In the case of the three now being run exclusively by the FDIC, the government will operate them for about 30 days, then let most of the workers go, except for a handful of people needed to continue to dispose of the assets.

As of Dec. 31, Silverton had 412 employees, New Frontier had 237 and First Bank of Beverly Hills had 35.

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