Georgia bank shuttered by regulators

First Georgia Community Bank is the 23rd bank to be closed this year.

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By Ben Rooney,

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NEW YORK ( -- State regulators in Georgia closed First Georgia Community Bank on Friday, marking the 23rd bank failure of the year.

The Federal Deposit Insurance Corp. said that the four branches of the Jackson, Ga.-based First Georgia Community Bank will reopen on Saturday as part of United Bank, of Zebulon, Ga.

First Georgia Community Bank had total assets of $237.5 million and total deposits of $197.4 million.

The FDIC estimates that the cost of Friday's action to the Deposit Insurance Fund will be $72.2 million.

"We welcome First Georgia Community Bank's customers and employees to United Bank, and we promise to make the transition as easy and seamless as possible," Jim Edwards, United Bank's chief executive, said in a written statement.

Bank failures have increased dramatically this year as a global financial crisis has unfolded. The 23 banks closed this year compares with only three bank failures last year, and no bank failures in 2006 and 2005.

In addition to the increasing number of banks failures, this year has seen a few very large banks go under.

In September, Seattle-based thrift Washington Mutual became the largest bank failure in U.S. history. That followed the demise of IndyMac Bank, a Pasadena, Calf.-based bank that had $32 billion in assets when it was closed in July.

The spike in failures comes as banks have been struggling with rising loan delinquencies and defaults as the economic crisis drags on.

At the same time, credit has been extremely tight as banks hunker down in anticipation of more writedowns related to illiquid mortgage-backed securities.

Meanwhile, the federal government has pumped billions of dollars into the financial system in an effort to free up lending and revive the ailing economy. But banks remain reluctant to lend as the economic outlook grows darker.

On Monday, the National Bureau of Economic Research made official what most Americans already believed about the state of the economy: that the U.S. has been in a recession since December 2007.

Banks have been criticized for hoarding taxpayer money or using it to finance the purchase of weaker rivals instead of lending it out. In response, banks have argued that they are working to increase lending and are working with delinquent borrowers.

On Tuesday, the Government Accountability Office released a critical review of the government's various economic rescue efforts.

The GAO said the Treasury's Troubled Asset Relief Program, which was originally designed to absorb bank's illiquid assets, lacked "effective oversight" necessary to ensure that banks "are complying with [the program's] requirements." To top of page

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