Regulators Shut Down Seven Banks

Bank regulators Thursday shut down seven banks, bringing the total number of failed U.S. banks and savings and loans during 2009 to 52.

This was the largest number of bank failures in one week during the 2008-2009 banking crisis, exceeding the previous record of five bank failures set just last week.

All of the failed banks were included in TheStreet.com's recent list of 89 undercapitalized banks and thrifts. The same was true of all five banks that failed last week.

In an unusual twist, six of Thursday's seven failed banks were headquartered in Illinois, and all six were subsidiaries of holding companies privately controlled by the Campbell Group, through what FDIC spokesman David Barr described as "fairly complex layers of ownership."

All six of the failed Illinois banks followed similar business strategies, with heavy concentrations in collateralized mortgage obligations (CMOs), commercial real estate loans and other commercial and industrial loans. All six saw their capital wiped out from losses on the CMOs, some of which were in default, as well as loan losses.

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