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95th Bank Failure Due to Rising Georgia Foreclosure Homes

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By : John Cutts    99 or more times read
The increasing number of Georgia foreclosure homes has claimed its latest victim in the form of Georgian Bank based in Atlanta. The bank closing is said to be the 95th case reported nationwide this year. Adding to the problem of the banking industry is the rising loan default rates involving commercial properties.

According to industry experts, more banks and other financial institutions are expected to close their business because of the pressure of the growing residential foreclosure problem. Additionally, the commercial real estate market is also showing some signs of joining the foreclosure bandwagon as a great number of commercial loans have been delinquent.

Experts said that bank failures could jeopardize the insurance funds for deposits which were already at their lowest points since 1989.

The control for Georgian Bank has been taken by the Federal Deposit Insurance Corp. (FDIC). The failed bank has nearly $2 billion deposits and $2 billion assets, as of the 24th of July this year. Columbia, South Carolina-based First Citizens Bank and Trust Co. has agreed to handle the deposits and assets of Georgian Bank.

Meanwhile, five branches of Georgian Bank in Atlanta will operate as First Citizens Bank offices. Furthermore, both the First Citizen Bank and FDIC have agreed to equally share Georgian Bank's losses on its estimated $2 billion assets and loans.

According to industry experts, Georgia foreclosure homes affected many businesses in the state. Georgian Bank's failure is expected to affect the nearly $892 million federal deposit insurance money. Experts have warned that the insurance money would be badly hit the growing number of bank failures.

As of June, the insurance fund dropped by 20 percent to an estimated $10.4 billion, the lowest since 1992 during the peak of the crisis involving savings and loans. Experts said that bank failures would cost the deposit insurance fund an estimated $70 billion until 2013.

Meanwhile, Sheila Bair, chairman of the FDIC, said that she is reviewing all options to boost the finances of the insurance fund, including borrowing money from the U.S. Treasury. Other options being considered by the FIDC include borrowing from banks with healthy portfolio, collecting special fees on banks or using the agency's Treasury credit line amounting to $500 billion.

Experts said that the increasing bank failure should not come as a surprise following the rising of Georgia foreclosure homes rates.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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