Risk Professional: USA hits 50 failed banks so far this year

Many of the banks that are failing now, and there were 8 on 16th April alone, are small banks: several have deposits of under USD300 million. Generally, no or a very small premium - perhaps 0.1% is paid for the deposits by banks taking over the failed banks which also pay a sum in respect of the bank's assets. This, however, is subject to claw-back if the assets turn out to be worse than expected.

Some banks, for example the Lakeside Community Bank of Missouri, cannot find any other bank to take them over. In that case, the bank supervisors simply send customers cheques for their balances up to the insured maximum.

It is the speed with which banks are being closed that gives cause for concern: in 2009, the worst year for which the Federal Deposit Insurance Corporation publishes records, the total number closed was 140. If the current pace keeps up this year, that figure could reach almost 200.

These are banks that service small businesses including small landlords and the quality of the underlying assets is, once more, at the heart of the problem.

But so is cashflow in small towns: almost all of the banks are outside major metropolitan districts, presenting a picture of a deeply unhealthy USA.

Failed banks are listed at www.bankinginsurancesecurities.com