Seven more banks fail - why so few?

The FDIC and state regulators took over another seven banks, raising the 2009 total to 52. Six were in Illinois and one in Texas. The cost to the FDIC will be about $314 billion. All of the closed bank's assets were bought by other banking companies.

The Wall Street Journallists the firms as First State Bank of Winchester, John Warner Bank, Rock River Bank, Elizabeth State Bank, First National Bank of Danville, Founders Bank, and Millennium State Bank of Texas.

Fifty-two banks seems like a lot, but it pales in comparison with some estimates. Last August, Nouriel Roubini told Barron's that 1,400 of the nation's 8,300 FDIC insured banks would be shuttered. RBC Capital put the figure at 1,000 over the three years beginning in February.

Why are closings not matching grim forecasts? There may be several reasons. One is that weak banks may be being sold before they close. Small financial firms may be able to offer larger ones valuable deposits and branch networks. Another reason is the regulators are probably keeping a much closer rein on shaky firms because of the damage caused by the recession. Banks are probably being asked to raise capital well before they have to be closed.

The last and perhaps most probable reason that banks are not closing in record numbers is that after the S&L crisis 30 years ago, the industry may have actually learned something. Lending against real estate assets may be a good way to make money, but leverage can get out of hand.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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