Bill Bartmann, the world's leading expert on debt collection, predicts that at least 1,000 banks will fail in 2010 - more than 7 times the number of banks that failed in 2009.
A bank fails when it's unable to meet its obligations to depositors and others and this results in it being closed by a federal or state banking regulatory agency.
In 2009, the Federal Deposit Insurance Corp.
(FDIC) shut down 140 banks and the FDIC Chairman Sheila Bair said in a recent interview for CNNMoney that more banks will fail in 2010.
With the sheer volume of bank failures, it's also clear that the rate of bank failure will also increase.
The FDIC is currently poised to auction $4 billion in commercial real estate (CRE) assets seized from banks.
Bill Bartmann says that this could be the catalyst that could push a number of smaller banks across the country over the edge.
CRE property values have, on average, fallen by about 40%, resulting in a situation where the mortgage on the commercial is more than what the real estate is worth.
Banks are reluctant to refinance under these conditions, wanting a higher loan to value ratio.
This situation will therefore, almost certainly, trigger a large number of foreclosures.
It's a dilemma that has been simmering away for quite some time.
It's a big problem and one that the FDIC admits is currently unavoidable saying that a number of banks are definitely "cooked".
Still, FDIC Chairman Sheila Bair is optimistic that the agency's deposit insurance fund will be able to handle the coming wave of bank failures.
However, the problem is that when commercial properties fail there is a domino effect and the economy contracts.
The Congressional Oversight Panel's February oversight report, "Commercial Real Estate Losses and the Risk to Financial Stability," said: "When commercial properties fail, it creates a downward spiral of economic contraction: job losses; deteriorating store fronts, office buildings and apartments; and the failure of the banks serving those communities.
" In other words, the recession will deepen further.
Unemployment figures will continue to rise and more individuals will go into debt.
The FDIC's strategy will be to first sell the assets that can generate the largest amount of cash the fastest and it will work through its assets until everything is sold including charged-off consumer loans.
And this is where even small, everyday investors and entrepreneurs can benefit as they can buy these charged-off consumers loans such as credit card debts for literally pennies on the dollar.
Investors can then collect many times the value of the loans they purchase while still offering those in debt a chance to either make smaller more manageable loan repayments or receive a discount for settling their account in full.
This creates a win-win situation.
The person in debt benefits and the investor can make a significant profit.
It's a very unique opportunity to personally make a profit while helping others out of today's banking crisis.