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Friday is Bank Failure Day
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One of my morbid pleasures is to wake up on a Saturday morning to look at the FDIC website , so I can see how many banks failed this week. I wasn’t disappointed. For October 30, there are nine new banks listed. That brings the total for 2009 to 115. In 2008, there were just 27; 3 in 2007. None for 2005 or 2006. Between 2001 and 2004, there were only 25 total. These nine new banks last night include Community Bank of Lemont and Park National Bank of Chicago. These two Chicago-area banks will reopen as part of US Bank on Monday. It’s too soon to know how much of the FDIC “facilitated” transaction was supported by taxpayer dollars.
Friday is an excellent day to report bank failures. It gives the 24-hour news cycle to do what it does best, bury the good stories. Banking hours are shortened on Saturdays and most retail banks are closed on Sundays. By the time Monday rolls around and you are ready to check you passbook savings (if you still can remember what a passbook looks like), your bank has a new sign on the front. You have no idea that your bank was closed 48 hours ago, the employees were temporarily hired by the federal government, and a bigger bank is likely to service your account going forward. You probably didn’t even know, or cared, that the taxpayers just bailed out your savings account while you slept.
I don’t subscribe to the theory that picking Friday is part of some great conspiracy to hide the truth of how bad things are. It's just the least disruptive day of the week to close a bank is Friday. We haven’t hit 1933, where 4,000 commercial banks and 1,700 S&L failed that year . But back in the 1930s, it wasn’t unusual to have one bank for every 1,000 people in small towns across the country.
For the record, I don’t even use a smaller, home town bank for my bill paying. When I got my car loan this year, it did go through Horizon Bank of Michigan City, Indiana (local-ish). The dealer and I did internet searches for the best rate and they won. In close seconds were Fifth-Third and US Bank. The local Fifth-Third branch wasn’t open at 9 p.m. when I did my search. We’re not going back to the 1930s.
I have accounts at Chase, which inherited my former accounts at NBD & First National Bank of Chicago through the Bank One mergers. I had an account at the Bank of Highland (Indiana), which changed names several times before I closed my account. I like Chase, because I use can use my ATM card anywhere, including the Chase branch I saw in Ventura, California last week. I pay most of my bills on-line and sync them up with Quicken. That was hard to do ten years ago.
By Monday, no one will notice one of the worst weekends for small banking in this decade. Compared to the Too Big To Fail stories of the past year and how most Americas bank these days, why get excited?
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