ATLANTA -- Federal regulators shut down Silverton Bank in Atlanta on Friday, a move that could shake the already fragile condition of hundreds of other banks in the Southeast.
The Federal Deposit Insurance Corp. estimated the failure would cost its deposit insurance fund $1.3 billion. Silverton's condition was so poor that the FDIC could not find a buyer.
Banks That Went Bust
Review the details on the banks that have been shut down by federal regulators since the start of 2008.
With $4.1 billion in assets, Silverton is the fifth largest bank to fail since the financial crisis intensified in 2008. Its impact could be profound. It provides services to one out of every five banks in the country, and its customers, depositors, and investors are all banks. It did not take deposits from the general public or make loans to consumers.
Some Georgia bankers argued to FDIC officials that Silverton was actually "too big to fail" because they said that its collapse could take at least 8 to 12 banks down with it. Roughly 400 banks are investors in Silverton Bank, and it clears payments and participates in loans with more than 1,000 lenders. It is the largest bankers' bank in the country.
Federal regulators worried for weeks about how to handle the bank's collapse because Silverton is so interconnected in the Southeast. Chartered in 1984, Silverton used to be known as the Bankers Bank until several years ago. It is the 11th bank to fail in Georgia since August 2008.
The FDIC created a bridge bank, Silverton Bridge Bank N.A., to manage Silverton. Bridge banks are used very rarely and typically only occur when a government decides a bank's collapse would be too disruptive, as with last year's failure of IndyMac Bank in California. The FDIC said "there is not expected to be any meaningful impact on the bank's clients."
Silverton is the 30th bank to fail this year in the U.S.
State News
May 4, 2009
Silverton Bank shut down
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