US Banks: Unbearable burden – Another Small Bank Shut Down

The volume of high-risk loans continues to be overwhelming for many small and medium sized banks in the US as another bank, this time the Ravenswood Bank of Chicago, shut down its operations. The Ravenswood Bank of Chicago it is now registered as another “victim” of the financial crisis. On Friday, the regulators announced the closure of Ravenswood Bank, which was established in the state of Chicago. The bank had assets of 265 million dollars and deposits of 269.5 million dollars. This increased the number of financial institutions which were forced to put under administrative arrangement status to 109. In its announcement, the Federal Deposit Insurance (FDIC) stated that Northbrook Bank has agreed to acquire all the assets of Ravenswood Bank.

The small sized U.S. banks are collapsing at a faster pace this year compared with the corresponding rates of 2009, but the failures in the banking sector are expected to peak this year.
The largest U.S. bank that went bankrupt because of credit crisis was Washington Mutual, with assets of 307 billion dollars in September 2008, switching then to administrative arrangement status. The FDIC, due to the banks bankrupt, has revised its estimations regarding the insurance cost of the deposits to 60 billion dollars for a five years time period (until 2014).