By Ari Levy and Margaret Chadbourn
July 2 (Bloomberg) -- Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed U.S. lenders this year to 52, the most since 1992.
For the year, 12 banks in Illinois have failed, the most of any state. The seven seized banks, with total assets of $1.49 billion and deposits of $1.34 billion, were closed by state or federal regulators and the Federal Deposit Insurance Corp. was named receiver, according to statements today from the FDIC. Buyers were named for each of the closed institutions.
“Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship,” the FDIC said in the statements.
Illinois is one of seven states that began the fiscal year yesterday without a spending plan, after Democratic Governor Pat Quinn refused to sign a budget because lawmakers failed to approve raising the income tax. In his original $53 billion budget proposal in March, the governor sought personal and corporate tax increases to help eliminate an $11.6 billion deficit and maintain state services. The state’s unemployment rate was 10.1 percent in May, compared with 9.4 percent nationally.
“This is a mess,” said Jack Ablin, who oversees $60 billion as chief investment officer at Harris Private Bank in Chicago. “We’re a manufacturing state and in the Midwest, so we’re influenced by the autos.”
Chicago is 280 miles (450 kilometers) from Detroit, home to General Motors Corp. and Chrysler LLC, which were forced into bankruptcy. Lear Corp., the Southfield, Michigan-based maker of automotive seats, announced plans today to enter bankruptcy.
Regulators this year have closed the most banks since the savings-and-loan crisis of the early 1990s as lenders struggle with mounting losses on real estate-related loans. The total for 2009 is more than double the 25 banks shuttered in 2008, and surpasses the 50 that were closed in 1993. The prior year there were 181 failures or government-assisted transactions.
The FDIC estimates today’s seizures will cost its insurance fund $314.3 million. The regulator imposed an emergency fee in May to raise $5.6 billion to rebuild the fund, which has deteriorated in the past 18 months. More assessments are possible, the FDIC said.