Fifty Fun Facts About Bank Failures, Legal Do...

Fifty Fun Facts About Bank Failures
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While I was researching thedifferences among thrifts, banks, and credit unions, I stumbled onto a bunch of bank failure related trivia that piqued my interest.
Most of the states are pulled from a listing available at theFDIC’s page for bank failures. To reach the search function, click on the “Bank & Thrift Failures” link in the blue menu located at the top. You can search by year, I just pulled down everything from 1934 to present and pushed it to an Excel spreadsheet. I added some razzle and dazzle (pulled out state names, used pivot tables) to augment the trivia I found online. You can download the spreadsheet (FDIC Bank Failures Data) and play with it yourself if you’d like (I pulled out the pivot tables for the sake of download size).
General FDIC Trivia
The Federal Deposit Insurance Corporation was created by The Banking Act of 1935, also known as the second Glass-Steagall Act of 1933. Initially, the FDIC insured deposits up to $5,000. Today, it insures deposits up to $100,000. $5,000 in 1933 dollars is worth $84,601.54 in 2008 dollars, so FDIC insurance coverage limits have exceeded inflation (according to theBLS’s inflation calculator). The FDIC also insures IRAs up to $250,000. At the end of 2007, the FDIC reported that its insurance fundhad about $52 billion. By the end of the second quarter of 2008, thatbalance fell to $45.2 billion, it’s estimated that IndyMac will cost the FDIC approximately $6-8 billion. As ofJune 2007 [PDF], the FDIC was insuring 7,350 commercial banks and 1,244 savings institutions - 8,594 total. In 1998, it was insuring 8,982 commercial banks and 1,729 savings institutions for a total of 10,711 financial institutions. As ofJune 2007 [PDF], the total assets at FDIC insured banks exceeded $12 trillion ($12,257,000,000,000 to be exact).Deposits at those banks [PDF] were a more pedestrian $6.6 trillion ($6,695,000,000 to be exact).
Deposit Insurance

FDIC insurance does not protect the contents of safe deposit boxes (but your homeowners insurance might). When two banks merge, your assets are insured separately for six months. So if you have $100,000 at Bank A and $100,000 at Bank B and Bank A bought Bank B, you would have $200,000 of coverage for six months. After six months, you’re covered only up to $100,000 by FDIC insurance. When two banks merge, any Certificates of Deposit that are opened or renewed within that 6 month period are considered separately insured. Those opened or renewed after the six month period are insured under the same umbrella. FDIC insurance assets in an insured bank in the United States and it does not matter if the account holder is a resident or citizen of the United States. Year with the Fewest Failures: 2005 and 2006 - no banks failed. Year with the Most Failures: 1989 - 534 banks failed that year. The Bank Insurance Fund (BIF) insures commercial banks and the Savings Association Insurance fund (SAIF) insures deposits at S&Ls/thrifts. They were merged in 2006 by the The Federal Deposit Insurance Reform Act of 2005 to form the Deposit Insurance Fund (DIF). (in case you’re wondering what the insurance fund column stood for) 2227 of the banks listed were insured by BIF. 1325 of the banks listed were insured by SAIF. 11 of the banks were insured by DIF, all within the last year and a half after the two funds were merged. The bank with the lowest FDIC certificate number was East Gadsden Bank (#40) and they folded on New Year’s Eve in 1980 (12/31/1980). 488 of the failures don’t even have FDIC certificate numbers (the ones that failed in the 1930’s and 40’s). The bank failure with the highest FDIC certificate number was Best Bank (#91189) and they went kaput on July 23rd, 1998.
S&L Crisis
During the Savings & Loan crisis, 747 savings & loans failed between 1986 to 1995. You thought that was bad? Overall, 2,377 banks failed. At the peak in 1988-1989, a bank failed every 1.38 days! The Lincoln Savings & Loan failure revealed what later became to be known as the Keating Five political scandal. Charles Keating was the head of Lincoln Savings & Loan and made $300,000 in political contributions to the Keating Five in the 1980s. There were also an additional hundreds of thousands in gifts and trips that weren’t accounted or paid for (back then the rules were a little laxer). Oops. TheKeating Five were Alan Cranston, Don Riegle, Dennis DeConcini, John Glenn, and John McCain. Cranston, Riegle, and DeConcini’s political careers ended, Glenn and McCain were cleared of wrongdoing and merely rebuked by the Senate Ethics Committee for using “poor judgment” in intervening with federal regulators on behalf of Keating. John McCain was the sole Republican among the Keating Five. That’s the same John McCain as the one running for President on the Republican ticket. John Glenn was the first American to orbit the Earth and most recently the oldest man to go into space.
State by State Fails

Texas has had the most bank failures with 898 failures from 1934 to 2008. California came in second with 223 failures. Oklahoma was third with 175 failures. Guam had a bank failure, American S&LA located in Dededo, Guam in 1984. And the Virgin Islands didn’t want to be left out of the list, they had their one and only bank failure in 1975 when The People’s Bank of the Virgin Islands closed up shop with a little under $15M in assets. Delaware had the fewest number of failures with only two failures (one in 1976 and one in 1988). The other single digit bank failure states are Idaho (6), Maine (6), Nevada (5), Rhode Island (6), and Vermont (5). Washington D.C., not a state, has had only 8 failures.
Smallest, Largest & In Betweens
The smallest bank failure ever was The Briggsdale State Bank located in Briggsdale, CO in February 1938. Briggsdale State Bank had $14,000 in assets. The largest bank failure ever was Continental Illinois Bank in 1984. Continental Illinois Bank had $39,956,956,000 in assets (”too big to fail!“). 153 banks don’t have total asset sizes listed! 194 of the banks that failed had over $1,000,000,000 in assets at the time of failure. The failure was blamed largely on bad loans purchased from the failed Penn Square Bank of Oklahoma. The origins of those loans was from the Oklahoma and Texas oil boom in the 70s and 80s. There was a big of fraud mixed in there as well. Continental Illinois Bank was bailed out by the Fed and limped along for ten years with 80% Fed ownership until it was bought by the predecessor to Bank of America in 1994. Bank of America recently bought Countrywide Financial… which has a lot of bad mortgage loans. History has a funny way of repeating itself… (it gets better)

The largest thrift failure ever, and third largest bank failure, was IndyMac Bank’s shuttering this year. IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 (yep, that same Countrywide) and used to collateralize Countrywide Financial loans that were too big to be sold to Freddie Mac and Fannie Mae. The MAC in IndyMac stands for Mortgage Corporation (much like how Freddie Mac and Farmer Mac are named).
Department of Coincidences Maybe (bonus!)
Finally, and I kid you not, the first bank failure listed on the FDIC search tool, if you search all the way back to 1934, was “BANK OF AMERICA TRUST CO.” of Pittsburgh, PA on 4/19/1934. Hmm…
If you want more trivia, the FDIC has a whole bunch of fun information in theirLearning Bank.