FDIC Closes Large Chicago Area Lender

Despite aggressive efforts to stay alive, Midwest Bank and Trust Co., was closed late Friday by Illinois regulators. The failure of the $3.2 billion-asset, Chicago-area bank came on a night when the Federal Deposit Insurance Corp. also found buyers for three other institutions, bringing the year's failure total to 72. Midwest's collapse - brought on in part by losses tied to the government-sponsored enterprises - came despite its receiving bailout funds to address its capital needs. The FDIC sold the bank's operations to $12 billion-asset FirstMerit Corp. in Akron, Ohio. The government's losses from the failure were estimated at $216 million. The three other failed banks totaled $342 million of assets. They were: $136 million-asset Satilla Community Bank in Saint Marys, Ga., $109 million-asset New Liberty Bank in Plymouth, Mich., and $97 million-asset Southwest Community Bank in Springfield, Mo. Together, the four failures were estimated to cost the FDIC about $300 million. Like other institutions, Midwest, the bank subsidiary of Midwest Banc Holdings, suffered sharp losses in its preferred stock holdings when the government's 2008 conservatorship of Fannie Mae and Freddie Mac depleted the GSEs' value. Midwest's problems were compounded by rising loan losses.