November 17, 2009

The cost of U.S. bank failures will continue to rise sharply and will likely exceed the government's current expectations, a leading investment banking executive said on Monday.James Dunne, senior managing principal of Sandler O'Neill, said he believes up to 1,000 banks will fail during the current crisis and the total bill will surpass the government's latest projection of $100 billion."There are a couple absolutes in the crisis," Dunne told the Reuters Global Finance Summit in New York.

"Whatever you thought it was going to cost, it has cost more."Dunne, who has been instrumental in advising major deals with Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) and PNC Financial Services Group (PNC.N: Quote, Profile, Research, Stock Buzz), said the cost will be painful for shareholders, but the overall economy and financial markets can with stand the failures."It's not going to be painful for the system,"he said. "I think these closures will not have a major effect."