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Regulators Close Banks In Florida, Washington

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Regulators Close Banks In Florida, Washington

Business

Regulators Close Banks In Florida, Washington

Regulators Close Banks In Florida, Washington

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In the two years since Washington Mutual became the biggest bank failure in history, another 279 banks have collapsed. Just last Friday, another two went down. Failures are expected to "persist for some time," according to a report issued by Standard & Poor's.

STEVE INSKEEP, host:

Once you get your tablet or smartphone, maybe you can apply one of those wonderful bank failure apps to keep track of the banking industry. Almost exactly two years ago, Washington Mutual was taken over by the federal government in the largest bank failure in U.S. history. Since then, 279 banks have collapsed - the highest number of failures in nearly two decades.

NPR's Wendy Kaufman reports.

WENDY KAUFMAN: Youve probably never heard of Haven Trust Bank in Florida or North County Bank in Washington State - but last week regulators shut them down, adding their names to the growing list of failed banks. Like most of the others on the list, they were small banks.

Jamie Peters, a banking analyst at Morningstar, adds that most of the banks that have failed have also been relatively young.

Ms. JAMIE PETERS (Banking analyst, Morningstar): They made a lot of loans to home builders, so those loans went really bad, really fast. And being a young bank, they typically did not have a lot retained earnings in which to save themselves.

KAUFMAN: They didnt have enough cash to bail themselves out. And, says Peters, failures among smaller and younger banks, will continue.

Ms. PETERS: The markets have opened for the large banks. The large banks were able to go out and raise equity. But if you are a tiny community bank, it's very hard to raise capital.

KAUFMAN: According to FDIC, the number of problem banks, as of the end of June, was 829 - thats more than 10 percent of the roughly 8,000 banks in the U.S. Small banks that fail, are often taken over by larger banks, and in this environment, the big banks are getting bigger and more powerful.

Wendy Kaufman, NPR News.

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