FDIC takes a $2.5 billion dollar hit, closing 9 banks in 1 day

November 2, 2:18 PMNY Page One ExaminerMolly Zelvonberg

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A notice hangs on the door as bank employees and people from the Federal Deposit Insurance Corp are seen inside a branch of California National Bank of Los Angeles, one day after the Federal Deposit Insurance Corporation closed CalNational and eight smaller related banks, in Los Angeles Saturday, Oct. 31, 2009. (AP Photo/Reed Saxon)

Nine banks owned by the same Illinois holding company were closed by regulators and the Federal Deposit Insurance Corp. The nine banks were subsidiaries of FBOP Corp., a holding company based in the Chicago suburb of Oak park., according to the FDIC. The closing brought the 2009 total to 115, so far. Banks in Georgia account for one-fifth of all U.S. banks closing this year, with 20 failures, followed by Illinois with 19, California with 13, and Florida with nine. FBOP is run by Michael Kelly, who from base in the Chicago suburbs took up banks in San Diego, L.A., Houston and San Francisco. He started in the 90's with First Bank of Oak Park, that had $125 million in assets.

The FBOP subsidiaries that were closed Friday were identified as Bank USA, Phoenix; California National Bank, Los Angeles; San Diego National Bank, San Diego; Pacific National Bank, San Francisco; Park National Bank, Chicago; Community Bank of Lemont, Lemont, Ill.; North Houston Bank, Houston; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas.

Cal National lost about $500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.

As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have cascaded and sapped billions out of the deposit insurance fund. It has fallen into the red.