Four more banks failed on Friday night bringing the total bank failures for 2009 to 81. It is interesting to look at the FDIC's bank failures since the year 2000. (Start at the bottom and scroll up):
As you can see we had only 3 banks fail during all of 2007.
When a bank fails the FDIC will enter on a Friday night. They then take over the bank and sell it to another competitor. After the sale, the FDIC usually guarantees against close to 95% of future losses on the failed bank's books. This means that not only does the FDIC lose money when they process their takeover, but they will continue to have losses moving forward.
It has been estimated by a large number of analysts over the past week that the FDIC is close to being out of funds. (They had about $60 billion to start last year) This does not mean that they will slow down, it just means that the new capital needed to run the company will need to come from the government or the Fed.
Also announced this week was the news that 1 out of every 8 homes in this country were either behind on loan payments or in some stage of foreclosure. This was at the end of the second quarter of this year (through June), so the numbers are now assuredly worse.
1 out of every 8.
We are going to need a tremendous amount of money to cover everyone from the FDIC, to State Governments, to the Big Banks and Auto Sector.
I only hope that the world is still hungry for our debt.