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Two U.S. banks seized, making 36 failures

CHAMPAIGN, Ill., May 23 (UPI) -- Two Illinois banks have been shuttered by regulators, marking the 35th and 36th bank closings in the United States so far this year, officials said.

Strategic Capital Bank of Champaign and Citizens National Bank of Macomb were closed Friday, Marketwatch reported.

The Federal Deposit Insurance Corp. said Strategic Capital had $471 million in deposits and $537 million in assets as of May 13, with Midland States Bank of Effingham, Ill., agreeing to acquire about $536 million worth of Strategic Capital's assets.

Morton Community Bank of Morton, Ill., meanwhile, has reportedly agreed to assume Citizens National's roughly $400 million in deposits and $437 million in assets.

Analysts told The Wall Street Journal the two Illinois bank seizures are the latest evidence that smaller banks across the United States are being squeezed by mortgage and other loan-related losses.

The newspaper said the 36 failures in 2009 are 11 more than the 25 recorded for all of last year, with dozens more banks expected to collapse through 2010.
FDIC board votes for more assessments

WASHINGTON, May 23 (UPI) -- The U.S. Federal Deposit Insurance Corp. says it will charge banks more to insure investors' deposits as bank failures drain FDIC insurance funds.

The agency's five-member board voted Friday to collect larger assessments from banks at a time when many such institutions are scrambling for funds just to stay in business and were warning that higher FDIC taxes will mean less money available to lend to customers, The Washington Post reported.

Especially targeted by the FDIC board were the largest U.S. banks with at least $100 billion in assets, which will have to pay about $500 million more than was previously planned.

FDIC Director Sheila Bair said it was fair to hit the biggest banks with higher assessments because 'over the past 18 months, large banks, as a group, have posed much greater risks to the banking system than small banks have,' the Post reported.

Comptroller of the Currency John Dugan argued against raising the FDIC assessments, saying hitting larger banks was 'frankly perverse' because the insurance fund was being tapped mostly because of the failures of dozens of smaller banks, the newspaper said.
Bankrupt Hartmarx accepts $119M bid

CHICAGO, May 23 (UPI) -- Bankrupt Chicago clothing manufacturer Hartmarx says it has accepted a joint takeover bid from a London private equity firm and an Indian suitmaker.

The company said in court filings Friday that it has approved a $119 million stalking horse bid for all its assets from Emerisque Brands U.K. Limited and SKNL North America B.V., The Chicago Tribune reported.

As a stalking horse bid, the Emerisque-SKNL proposal will be used to establish a framework for other potential bids as Hartmarx -- the preferred clothier of U.S. President Barack Obama -- prepares for a June 25 bankruptcy court hearing and a possible July 9 appearance to approve the sale of the company to Emerisque-SKNL or a different successful bidder, the newspaper said.

Emerisque gave Hartmarx a deadline to act this week on its third and final bid. The Tribune said the firm has worked on the turnarounds of such brands as Puma, Ben Sherman and Lee Cooper, while SKNL of India has announced an intent to expand internationally through acquisitions.

Liquidation rather than a sale of the suitmaker remains a possibility as Wells Fargo & Co. (NYSE:WFC) , Hartmarx's chief lender, is reportedly pushing for that outcome.
BofA: Mortgage holders get $823M in relief

WASHINGTON, May 23 (UPI) -- Troubled U.S. homeowners could save up to $823 million from a predatory lending settlement reached this week with Bank of America (NYSE:BAC) , state officials say.

Under the terms of the deal, Bank of America neither admitted nor denied wrongdoing but agreed to modify the terms of 390,000 subprime and 'option ARM' mortgages originated by Countrywide Financial Corp., which was acquired by BofA last year, The Wall Street Journal reported.

The bank has so far modified 50,000 of the mortgages, a report provided to state attorneys general in California, Florida, Illinois and elsewhere this week indicated. They had sued BofA saying Countrywide's marketing and sale of such risky mortgages constituted predatory lending, the Journal said.

Subprime and option ARM mortgage holders with modified plans are saving an average of $195 per month in principal and interest payments, with biggest savings reportedly going to option ARM holders at $311 per month, Bank of America says.

The Journal said BofA has reported that 11,000 borrowers and tenants living in foreclosed buildings who didn't qualify for its loan modification efforts have collected $22.4 million in relocation assistance.