Seven more banks failed late Friday, including institutions in Illinois, Minnesota, Wisconsin, Georgia, and three in Florida. The FDIC posted the liabilities it would assume and which banks would take on customers from the shutter institutions in detail on its website.
According to MarketWatch, "CreditSights, which tracks the dismal data, predicts that in the current cycle, from 2008 through 2011, as many as 1,100 banks will fail. That would wipe out 13.4% of all U.S. banks, representing 7% of U.S. banking assets."
The FDIC has already proposed that the nation's banks "prepay" the deposit insurance that is due between now and 2010. That would raise about $45 billion for the agency. The FDIC said it fell into the red in late September, which means that it faced the prospects of having to ask the Treasury for billion of dollars to cover the expenses of more bank closures
Clearly no one knows how many U.S. banks will fail. At one point over a year ago, economist Nouriel Roubini said the figure could hit 1,500. Even if the number is never close to that, the cost of the scores of bank failures to come is another unanticipated drag on the amount of money the federal government will have to spend to keep the credit system afloat.
Douglas A. McIntyre is an editor at 24/7 Wall St.