Bank failures hit Puerto Rico hard

Three bank failures took place last week in Puerto Rico, affecting about a quarter of the assets of the island's 10 banks.

By , Guest blogger

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    Last October, Puerto Rico's police officers surrounded a masked demonstrator to prevent the painting of slogans outside a bank in San Juan in a rally against government austerity measures. The financial crisis has hit the island hard. This past Friday, the FDIC announced three bank failures, holding about a quarter of the assets of Puerto Rico's 10 banks.
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This past Friday seven additional banks went under, for a total of 64 failures so far this year. The FDIC took over the banks, including three in Puerto Rico which account for roughly a fourth of the island’s bank assets.

From The Wall Street Journal:

“Three of the banks [...] were located in Puerto Rico and held about $21 billion in assets. That’s about a quarter of the assets of the 10 banks headquartered on the island.

“Regulators also shuttered CF Bancorp in Port Huron, Mich., which had 22 branches, $1.65 billion of assets, and $1.43 billion of deposits; Champion Bank in Creve Coeur, Mo., which had $187.3 million in assets and $153.8 million of deposits; BC National Banks in Butler, which had just $67.2 million of assets and $54.9 million of deposits; and Frontier Bank in Washington, which $3.5 billion of assets and $3.1 billion of assets…

“…The seven failures cost the FDIC’s deposit insurance fund more than $7 billion.”

By Saturday, FDIC Chairman Sheila Bair was already out getting ahead of the story in public with Puerto Rico Governor Luis Fortuno, trying desperately to put a positive spin on the matter. She described it as an optimistic “inflection point,” and that there are “signs of repair.”

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It’s hard to buy that story though. Another post shows that this is the largest day of bank failure since back in July of 2008. That was when IndyMac cost the FDIC $8 billion. Hopefully any future “signs of repair” will cost the FDIC a whole lot less.

You can see more details on the closures, as well as an interactive map, in The Wall Street Journal’s tracking of bank failures.

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