Six banks in Illinois and one in Texas were seized by regulators as the deepening financial crisis pushed the toll of failed US lenders this year to 52, the most since 1992.

Twelve banks have failed this year in Illinois, the most of any State. The seven lenders seized today, with total assets of $US1.49 billion and deposits of $US1.34 billion, were closed by State or federal regulators and the Federal Deposit Insurance Corp was named receiver, according to statements from the FDIC.

Buyers were named for each of the closed institutions.

The Illinois banks are affiliates of Peotone Bank & Trust Co, in Peotone, Illinois, about 72km south of Chicago. The failures resulted primarily because of soured loans and losses on investments in collateralized debt obligations, the FDIC said.

Illinois, with an unemployment rate above the national average, was one of seven States to begin the fiscal year yesterday without a spending plan.

The six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution, the FDIC said.

CDOs, which packaged bonds and loans into notes of varying risk and yield, lost money as real estate defaults soared.

Regulators this year have closed the most banks since the savings-and-loan crisis of the 1990s as lenders struggle with mounting losses on mortgages and commercial loans.

The total for 2009 is more than double the 25 banks shuttered in 2008 and surpasses the 50 that were closed in 1993. The prior year there were 181 failures or government-assisted transactions.

FDIC Fund

The FDIC estimates today's seizures will cost its insurance fund $US314.3 million. The regulator imposed an emergency fee in May to raise $US5.6 billion to rebuild the fund, which has deteriorated in the past 18 months.

More assessments are possible, the FDIC said.

Illinois Governor Pat Quinn, a Democrat, refused to sign a budget because lawmakers failed to approve raising the income tax. In his original $US53 billion budget proposal in March, the governor sought personal and corporate tax increases to help eliminate an $11.6 billion deficit and maintain state services.

"This is a mess," said Jack Ablin, who oversees $US60 billion as chief investment officer at Harris Private Bank in Chicago. "We're a manufacturing state and in the Midwest, so we're influenced by the autos."

In addition to CDOs, the failed banks were plagued by losses on commercial real estate loans.

Founders Bank of Worth, the biggest of the Illinois banks seized today, had $US374 million in construction and commercial real estate loans as of March, accounting for 63 per cent of the banks net loans and leases, according to a regulatory report.

BLOOMBERG