Given the large number of Illinois banks on the Federal Deposit Insurance Corporation's list of failed banks, how have Illinois banks generally fared during the national banking crisis?

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kipling2448 | (Level 3) Educator Emeritus

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With 59 of its banks currently on the Federal Deposit Insurance Corporation's Failed Bank List, Illinois is certainly well-represented in the category of bank failures.  While other states, Florida, for example, are also well-represented -- and state population should be considered in any discussion of relative banking problems, as states with larger populations generally have more banks -- Illinois is ranked #3 on the list of "most dangerous states for banking" by the senior financial analyst for MoneyRates.com. [www.money-rates.com/news/the-most-dangerous-states-for-banking.htm]  As MoneyRate.com's analyst notes, however, Illinois has not fared disproportionatly worse than its number of failed banks would seem to indicate given the size of its banking market.  When size of banking market is factored into the equation, then Illinois' ranking drops, although how far is not specified.  Certainly, though, Florida, Washington, and Georgia are in much worse shape than Illinois, although it is all degrees of bad.

When the FDIC first began to develop its Failed Bank List, Illinois stood out with the highest number of bank failures, which certainly indicated the potential for a problem in how that state regulates its banks -- and banking regulation is a complicated matter, with both federal and state agencies providing oversight of various categories of banks.  Bank failures in Illinois continue at a worrisome rate, with eight banks closing in 2012, but the Failed Bank List shows only two of its banks closing their doors so far in 2013.  

In conclusion, Illinois has not fared well during the period of bank failures beginning in 2008.  It has suffered a very high number of bank failures.  As noted, however, relative to the size of its banking market, its losses are not disproportionately large.  The yardstick for such measurements, however, is extremely skewed given the scale of the crisis that erupted five years ago.  No state should experience as many bank failures as Illinois, Florida, Georgia and Washington State have in that period of time.  

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