UH OH: Small Banks Failure Rate Grows, Straining F.D.I.C. “Regulators expect closures to ripple through hundreds of small banks over the next couple of years, especially in the Midwest and Southeast, where lenders have been hard hit by the recession.”

UPDATE: I talked to an uncle today, who’s on the board of a couple of small community banks. He says that the FDIC insurance premium increases are very hard on small banks, and will accelerate closure problems — and that the new idea of having banks prepay premiums for 3 years to help build up FDIC reserves is making people wonder about the FDIC’s strength. What would you think of an employee who asked for a 3-year salary advance? . . . .