Friday market the largest amount of United States government take overs in one single day since the beginning of the financial crisis and the almost complete collapse of the financial sector of the United States.

The nine banks (which brings the total to 115 for the number of failed banks in 2009) that were taken over showed that there is a trend in the banking industry that banks are begging to be injured by bad loans that are going south quickly.

Even with these bank failures, these are smaller banks. The largest was still Washington Mutual when it was seized just over a year ago in September 2008.

The banks, which were being held by FBOP Corp, were acquired by U.S. Bancorp to the tune of $18.4 billion in assets as well as $15.4 billion of deposits. U.S. Bancorp has been going around this year purchasing distressed assets.

It is unsettling to know that banks are still failing and will likely continue to fail as more loans begin to mature and become due. There is also an issue that is coming up concerning Option-A mortgages’ rates resetting in the next year. These were a lot like the subprime mortgages that caused so much of the financial crisis. When they reset in the next couple of years, we could actually see a bigger problem than what we saw in the past two years with subprime mortgages and foreclosures.

With foreclosures on the rise and unemployment really not letting up either, the problem with banks is also going to likely get worse before it gets better. I am not sure if there will be more bank takeovers in the next year, but the FDIC was already hurting from all the banks it had to pick up after they failed

The problem is coming from AIG’s trading partners and while i has fulfilled its contracts with banks, both domestic and foreign, it has paid out over $90 billion of the bailout money to big names in finance from losing on its bets associated with subprime mortgages as well as other risky assets.

From MSNBC:

As the cost of the rescue swells, experts says it’s becoming harder to envision a scenario in which the government could recoup its full investment. Even though the AIG payouts to major banks have angered critics of the bailout, it might be legally impossible to claw back any of the billions already doled out.

“A contract is a contract,” said Russell Walker, a risk management professor at Northwestern University. “That money all went to people who bought protection from AIG.”

The government agreed to uphold those contracts when it seized control of American International Group in September. It argued that failing to repay the debts of the globally interconnected company could cause catastrophic losses at big international banks, potentially toppling the financial system.

Scrutiny of AIG’s dealings with its trading partners comes after revelations over the weekend that the insurer plans to pay out tens of millions in executive bonuses. President Barack Obama on Monday accused AIG of “recklessness and greed.” He pledged to try to block it from handing out the bonuses, which AIG insists it’s contractually obligated to pay.

With all the focus on AIG today and over the weekend, the company will be under scrutiny by not only the public, but law enforcement also.

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Until now, the nation’s most serious home price declines have been in low-cost markets that were dominated by subprime mortgages, and in overbuilt markets such as Florida, California, and Las Vegas, where residential values are sliding fast toward pre-housing boom levels.

The Commerce Dept. reported Dec. 23 that November new-home sales in the U.S. fell to their lowest level in 17 years, down 35.3% compared with November 2007. And the outlook is even bleaker. The same day, Credit Suisse (NYSE:CS – News) forecast that more than 8 million homes will go into foreclosure over the next four years, or approximately 16% of all U.S. households with mortgages.

The housing market is expected to continue the fall next year, but hopefully we will see a bottom to housing prices and an increase in lending…hopefully.

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