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Closures in Nebraska, Florida, Illinois and Oregon bring the number of bank failures to 13 this year as the financial crisis continues to roll.

NEW YORK (CNNMoney.com) — Four banks folded Friday, bringing the total number of banks to fail this year to 13.

Deposits at Sherman County Bank, based in Loup City, Neb., the first bank in the state to fail since 1990, will be taken over by Heritage Bank, based in Wood River, Neb., according to the Federal Deposit Insurance Corporation.

Meanwhile, accounts held by Riverside Bank of the Gulf Coast based in Cape Coral, Fla., will be assumed by TIB Bank based in Naples, Fla., the FDIC said. It is the second bank to fail in Florida this year and the fourth to go under in that state since the economic crisis unfurled.

Corn Belt Bank and Trust Company, based in Pittsfield, Ill., the third bank to fail in the state since January 2008, was also shuttered by state regulators, and its deposits were turned over to The Carlinville National Bank out of Carlinville, Ill.

Pinnacle Bank, Beaverton, Oregon, was closed by the Oregon Division of Finance and Corporate Securities. The FDIC entered into an agreement with Washington Trust Bank, Spokane, Washington, to assume all of the deposits of Pinnacle Bank.

Customers who banked with Sherman County Bank, Riverside, Corn Belt Bank, or Pinnacle Bank will automatically become customers of the new owners, and will retain their account protection under the FDIC, which insures single accounts up to $250,000, and joint accounts up to $500,000, the government agency said.

Due to the Presidents Day holiday on Monday, Sherman County Bank’s four branches, Riverside’s nine branches, and Corn Belt Bank’s two, will reopen on Tuesday as branches of the new deposit holders, the agency said.

Over the three-day weekend, those customers will be able to use checks, ATMs and debit cards as normal. Customers who have taken out loans from a failed bank should continue to make regular payments, the FDIC said.

Sherman County Bank held assets worth about $129.8 million, and held deposits worth about $85.1 million, as of Feb. 12, the FDIC said. Heritage Bank has agreed to purchase about $21.8 million of Sherman County Bank’s assets.

Riverside Bank held assets worth about $539 million, and held deposits worth about $424 million, as of December last year, the FDIC said. TIB Bank will not assume $142.6 million worth of brokered deposits held by Riverside Bank, but agreed to buy $125 million of Riverside’s assets.

Corn Belt Bank carried assets worth about $271.8 million, with deposits of $234.4 million, according to the agency. Carlinville National will not take on $92 million of Corn Belt’s brokered deposits, but would buy $60.7 million of Corn Belt’s assets, the FDIC said.

Pinnacle Bank had total assets of approximately $73 million and total deposits of $64 million. In addition to assuming all of the deposits of the failed bank, including those from brokers, Washington Trust Bank agreed to purchase approximately $72 million in assets at a discount of $7.6 million, the FDIC announced late Friday.

Altogether, the bank failures announced Friday will cost the FDIC about $341.6 million.

The unfolding financial crisis continues to take a toll on banks. If banks continue to fail at a rate of at least one per week, on average, then 2009 could see twice as many failures as in 2008. Last year, 25 banks were closed nationwide, which was the highest annual total since 1993, when 42 banks went under.

Economists expect the number of failed banks to continue rising this year, as the financial crisis plays out and the economic outlook remains dark.

Senate votes to approve the historic legislation aimed at reviving the economy. Bill is now sent to President Obama for signing.

NEW YORK (CNNMoney.com) — It’s a done deal. Still controversial, but a done deal.

The Senate on Friday evening passed the $787 billion American Recovery and Reinvestment Act of 2009, which was drawn up, amended and negotiated in record time.

The bill got 60 votes — the minimum it needed to pass. Three Republicans — Sens. Susan Collins, R-Me., Arlen Specter, R-Pa., and Olympia Snowe, R-Me. — voted for it. Earlier in the day, no Republicans in the House voted for the legislation, which nevertheless passed 246 to 183, with just 7 Democrats voting against it.

President Barack Obama will sign the recently approved economic stimulus bill on Tuesday in Denver, Colorado, two senior administration officials told CNN.

Both officials cited a desire of Obama’s to get out of Washington — to go, in the words of one official, “out west in an area hit hard economically, away from the politics of Washington.” The other official described Denver as “a place that will see the benefits of the bill in hiring workers.”

“The goal at the heart of this plan is to create jobs. Not just any jobs, but jobs doing the work America needs done: repairing our infrastructure, modernizing our schools and hospitals, and promoting the clean, alternative energy sources that will help us finally declare independence from foreign oil,” President Obama said Friday morning.

The Obama economic team estimates the stimulus plan will create or save between 3 million and 4 million jobs.

“We’ve done something today that’s transformational for the nation,” said House Speaker Nancy Pelosi, D-Calif., in a press conference after the House vote.

During the House floor debate earlier on Friday, House Appropriations Committee Chairman David Obey, D-Wisc., characterized the bill as “the largest change in domestic policy since the 1930s.”

The bill’s final passage would represent far less than the bipartisan victory Obama had hoped for weeks ago, a hope he tabled as it became clear that Republicans and some fiscally conservative Democrats were adamantly opposed to the size and contents of the bill.

Republican critics believe there are more targeted and effective ways to create jobs than the measures in the bill, including more spending on infrastructure and more tax relief.

They frequently cite the tag line to describe what Democrats have often said makes stimulus measures effective — that they be timely, targeted and temporary. “This bill fails on all three points,” Senate Minority Leader Mitch McConnell, R-Ky., said Friday.

In the House, Rep. Mike Pence, R-Ind., blasted the bill as misguided.

“Republicans are not about saying ‘No’ but about saying ‘Yes’ to solutions that put Americans back to work,” Pence said. “[This legislation] will not grow our economy. It will grow our government.”

And they frequently cite the burden of such an expensive package on the country’s record high deficit and the burden that will place on the next generation.

In response to Republican critics, Sen. Dick Durbin, D-Ill., cited provisions in it that will help families facing job loss, education expenses and mortgage troubles.

“Consider the impact on the next generation if their parents lose a job … if their home is foreclosed upon … if they’re forced out of college because their parents can’t pay the bills,” Durbin said.

Democrats have also countered the Republicans’ debt argument by noting that record deficit levels were achieved as a result of borrowing to pay for the cost of the Iraq war and to finance a series of tax cuts — both decisions made during a Republican administration.

The compromise bill was crafted after intensive negotiations in recent days between the House, Senate and White House, although Republicans said repeatedly they felt excluded from the process. And on Friday, several said they did not think it was fair that they were being asked to vote on a 1,000-page-plus bill that was posted online only late Thursday night.

The package devotes $308.3 billion — or 39% — to appropriations spending, according to the Congressional Budget Office. That includes $120 billion on infrastructure and science and more than $30 billion on energy-related infrastructure projects, according to key congressional committees.

It devotes another $267 billion — or 34% — on direct spending, including increased unemployment benefits and food stamps, CBO said.

And it provides $212 billion — or 27% — for tax breaks for individuals and businesses, although the biggest piece of that is for individuals. (Here’s a quick breakdown of those breaks.)

Depending on how tax measures are categorized, the percentage of the bill devoted to tax relief is 35%, according to the Joint Committee on Taxation.

Unlike the CBO, the committee counts all portions of tax credits that are refundable. A refundable credit is one that may be paid to tax filers even if the credit exceeds a tax filer’s liability. In other words, it is money the government needs to spend. The CBO, by contrast, treats that money as an outlay.

Republicans have advocated for more tax relief in the bill — they wanted at least 40% — and they often oppose tax credits going to those who pay less in income tax than they receive in refunds.

Democrats counter that the lowest-income families do pay money into the system by way of payroll tax for Social Security and through sales taxes. And they note that it is those low-income families most likely to quickly spend any tax relief they get, thereby making it more stimulative for the economy.

For months, economists — both liberal and conservative — have urged lawmakers to act quickly to help stem the economic downturn. They argue that while tax cuts can be put out more quickly than infrastructure spending, they may not be as stimulative as spending because tax filers are likely to save at least a portion of what they receive.

There also has been debate over how large the total package should be. Many economists think it should be larger — to help combat what is expected to be a $2 trillion shortfall in the country’s output this year and next. But at this point, though they’re not enamored with every provision in the bill — they say it’s necessary to do something.

Proponents of the bill aren’t promising the economic recovery package will be a panacea for the economy. “No one thinks this is the answer,” said House Majority Whip Steny Hoyer, D-Md.

But, they say, it’s needed to stem the downturn and ease the financial strains hurting Americans. Indeed, Obama’s economic team last month said they expect that the unemployment rate likely will go up in the near term but having a stimulus package could bring it down to around 7% by the end of 2010. That’s slightly below the rate of 7.6% today.

Gov. Schwarzenegger’s Golden State is in a world of pain. Now it can’t meet its obligations to taxpayers, vendors and others until a budget deal is reached.

NEW YORK — Running short of cash, California has started delaying $3.5 billion in payments to taxpayers, contractors, counties and social service agencies.

With the governor and state lawmakers locking horns on resolving California’s budget crunch, the controller Monday halted checks covering these obligations so the state could continue funding its school system and making its debt payments.

The delay will inflict more pain on the already sorry condition of the Golden State, which is facing a $40 billion budget gap. People won’t have tax refund money to spend, businesses won’t get paid for their services and agencies won’t have funds to help the needy until the budget situation is addressed.

Nearly $2 billion in personal state income tax refunds are being held up, according to state estimates. Last year, some two million Californians received refunds in February.

“People are going to be hurt starting today,” said Garin Casaleggio, a spokesman for Controller John Chiang.

Also on hold are $515 million in payments to the state’s vendors and $280 million to help people with developmental disabilities. Other public assistance agencies will be left waiting for hundreds of millions of dollars.

Gov. Arnold Schwarzenegger and legislative leaders are behind closed doors trying to hammer out a solution to the state’s budget crisis, which also includes a $15 billion budget deficit for 2008-2009 and a projected $25 billion gap for 2009-2010. The governor has proposed draconian spending cuts in virtually every department, as well as hefty tax increases, to close the widest deficit in its history.

California not alone in feeling pain

California, the world’s eighth largest economy, is not alone in its budget troubles. Some 46 states face budget shortfalls, forcing them to slash funding for many services.

But California, the largest state in the union by population, faces a deficit that totals more than 35% of its general fund.

Some 257,400 jobs in the Golden State evaporated in 2008, pushing the unemployment rate up to 9.3% in December, the fourth highest nationwide. Its median home price plunged nearly 50% since the spring of 2007.

Meanwhile, the demand for assistance has risen. The number of Californians receiving food stamp benefits increased by 13.8% for the year ending September 2008, while the number of families receiving cash assistance from the CalWORKs welfare program rose by 5.9%, according to the California Budget Project.

The state’s fiscal troubles largely stem from its heavy reliance on personal income taxes. This revenue stream dries up when recessions hit and unemployment soars. California also never fully recovered from the dot-com bust. So the state didn’t have large reserves to fall back on when the bottom fell out of the economy.

“We went into this downturn in a very weak position,” said Jean Ross, the California Budget Project’s executive director.

On top of its economic troubles, the state is also coping with a near shutdown of the nation’s government bond markets, which had allowed it to borrow to cover its short-term debts. This fall, the state was only able to borrow half of what it needed to see it through the fiscal year.

The lack of access to the bond markets prompted the state in December to suspend funding for more than 2,000 infrastructure projects, leaving many people and businesses without much-needed work.

And because of California’s financial woes, credit rating agencies are taking a dim view of the state. Moody’s warned in mid-January it might downgrade California’s general obligation bond rating because of its budget and liquidity problems. If this happens, it will become even costlier for California to borrow.

Deep cuts and steep tax increases

To shore up California’s budget, the governor wants to slash spending by $17.4 billion, according to the California Budget Project. Included are cutting $7.7 billion from public education, eliminating dental and other benefits for adults on Medicaid and requiring state workers to take two unpaid days off per month.

Schwarzenegger is also looking to boost revenue by $14.3 billion and borrow $10 billion more. He wants to raise the state sales tax by 1.5 points - to 8.75% - through the end of 2011 and hike alcoholic beverage taxes by a nickel a drink.

“The truth is that California is in a state of emergency,” Schwarzenegger said in his State of the State address on Jan. 15. “The $42 billion deficit is a rock upon our chest and we cannot breathe until we get it off.”

Even after state officials hammer out a deal, payments may not start flowing right away, Casaleggio said. It hinges on the details of the agreement, as well as on how much tax revenue the state collects in January.

“It all depends on the money that’s in the Treasury,” Casaleggio said.

Some relief may be coming California’s way. The state stands to receive billions from the $819 billion stimulus package that just passed the U.S. House of Representatives.

The state could get as much as $63.4 billion, some 12.3% of which could be used to balance the budget, according to the Center for American Progress. Some $3.6 billion could go for highway construction and transit improvements, restarting some of the projects currently idling. California will also receive billions to pay for education, Medicaid and other benefits.

source: CNNMoney