We've been getting lots of great comments and questions about how the FDIC seizes failed banks. This weekend we'll get deeper into that process on This American Life, and next week we'll get to some of your questions on the depleting Deposit Insurance Fund.
Today being Friday and all, I am sitting here waiting to see if and where banks will fall. If you check the failed bank list obsessively like me (please don't) you'll start to see some states showing up a lot. Georgia makes the list 8 times in the past 7 months. No other state has seen that many failures since September. Like the Bank of Clark County (from our story), community banks in Georgia got big into the housing and development boom. They rode the wave of profits and now it's coming to an end.
When the FDIC seizes bank, they really want another bank nearby to assume the insured deposits. In the case of the Back of Clark County, it was Umpqua with a big presence across the river in Portland. But in Georgia, more often than not the FDIC can't find a local bank healthy enough to take on the deposits. Which leaves them running the bank (which is hugely expensive and resource intensive) or they send the deposits to an assuming bank far away like Minnesota (a state that made the the failed list only once).
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