Two Friday Bank Failures Will Cost FDIC $212.5 Million

Some of our readers have been following the AdSurfDaily case, which involved the seizure of nearly $100 million by the U.S. Secret Service amid allegations that ASD was running a Ponzi scheme while calling itself an advertising company.

One of the roles of the Secret Service is to protect U.S. economic health and the health of the banking system. Some ASD members have been harshly critical of the agency for seizing the money.

The criticism, however, is short-sighted, particularly in an environment in which banks are failing and personal wealth is plunging. The U.S. banking system is in troubled waters, a point driven home yesterday in twin actions by the FDIC.

Two bank failures Friday in Georgia and Texas will cost the FDIC insurance fund a combined $212.5 million and bring the number of U.S. bank failures this year to 25. There were seven failures in 2007.

The Georgia Department of Banking and Finance closed Haven Trust Bank yesterday. The FDIC was named receiver. Haven Trust was headquartered in Duluth, Ga.

“To protect the depositors, the FDIC entered into a purchase and assumption agreement with Branch Banking & Trust (BB&T), Winston-Salem, NC, to assume all of Haven Trust’s deposits, including those that exceeded the insurance limit [of $250,000],” the FDIC said in a statement.

Haven Trust was the fifth Georgia bank to fail this year. Its failure will cost the FDIC insurance fund $200 million.

Meanwhile, the Texas Department of Banking closed Sanderson State Bank of Sanderson, Texas. The FDIC was named receiver. The agency entered into a purchase and assumption agreement with The Pecos County State Bank, Fort Stockton, Texas, to assume all of Sanderson State Bank’s deposits, including those that exceeded the deposit insurance limit.

Sanderson State Bank was the second bank failure in Texas this year. Its failure will cost the FDIC insurance fund $12.5 million.