This takes the total number of bank failures to 11 so far in 2011, following 157 in 2010, 140 in 2009 and just 25 in 2008.
The FDIC insures deposits in 7,760 banks and savings associations in the country as well as promotes the safety and soundness of these institutions. When a bank collapses, the FDIC reimburses deposits of up to $250,000 per account.
Though the FDIC has managed to shore up its deposit insurance fund during the last few quarters, the outbreak of bank failures has tested its limits. As of September 30, 2010, the fund remained in the red with a deficit of $8 billion despite adding $7.2 billion during the quarter.
In the third quarter of 2010, the number of banks on FDIC's list of problem institutions grew to 860 from 829 in the previous quarter and 552 in the year-ago quarter. This is the highest since the savings and loan crisis in the early 1990s.
Increasing loan losses on commercial real estate are expected to result in hundreds of bank failures in the next few years. Going by the current rate of bank failures, the FDIC is likely to feel a $52 billion pinch over the next three years.
