The FDIC recently shut down another three banks, bringing total bank failures in the US so far this year to 98. Last year there were 25, and in 2007, there were only three.

The Federal Deposit Insurance Corp. is not just the government entity that insures your cash deposits in the bank; the FDIC also has the unenviable task of unwinding banks that have run up massive debts and have no cash on hand to pay them off or cover their customers’ needs. When too many customers (depositors) learn of the rickety state of their bank and line up to demand their money, it’s called a run on the bank. Runs can drain a bank down to nothing, and the FDIC has to make the call when it’s time to close the doors and sell off the remaining deposits and assets to another, healthier bank, thus avoiding a situation where the FDIC has to make good on all the remaining cash demands of the depositors and creditors of the bank long after all the cash has been drained away by a bank run.

Unfortunately for the FDIC, the pool of healthy banks willing (and able) to buy up the assets of ailing banks has dwindled, leaving the FDIC with a lot of assets on its hands that may in the long term be worth money, but right now can’t be sold for even pennies on the dollar. The FDIC’s own cash pool, which comes from annual fees paid by banks (about 12 to 16 cents for every $100 of deposits) has dwindled.

In 2008, the FDIC spent $20 billion of its cash reserves on 25 bank failures; this year, that figure is more than $30 billion. Around the 1st of October, the FDIC’s cash reserves went into the red–meaning that they need to raise cash fast to cover more expected bank failures. The FDIC estimated earlier this year that they would spend approximately $70 billion total by the end of next year, but raised that estimate recently to $100 billion. The need for cash is hanging over FDIC Chair Sheila Bair like the sword of Damocles.

Big investment banks, like Goldman Sachs and JP Morgan, have been keeping an eye on the situation and trying to figure out how to make money from it all. Last month they proposed loaning money to the FDIC so that Sheila Bair, who’s been a major critic of how Fed Chief Ben Bernanke and Treasury Secretary Timothy Geithner have run the financial industry bailout (without strengthening regulation in the process), can avoid going to her enemies for a loan.

The FDIC has two ways to raise more money. It can borrow money from the US Treasury (with Timothy Geithner’s approval) or it can levy a special assessment on banks. But the FDIC had already issued a special assessment last May, and Bair’s critics wailed that another special assessment, or an increase in the annual assessment, would only drive more ailing banks into the ground. Bair didn’t much like the prospect of borrowing money from Goldman or JP Morgan at usurious rates or, heaven forbid, at adjustable rates (a type of loan that should be illegal, after all the damage it’s done to the economy and to peoples’ personal balance sheets). So Bair came up with a compromise.

The FDIC will ask banks to pre-pay their annual assessments through 2012. In other words, Bair is taking an interest-free loan from banks. In order to avoid harming the banks that are still struggling, she gave them the okay to not report the prepayments on their financial statements, so their cash reserves will look better than they really are.

How is this different from the accounting tricks that banks have been using to hide their debts and overvalue their risky investments to make their cash reserves look good? According to Bair, the difference is in degree. The few pennies that make up the FDIC assessment will be small change compared to the other expenses on banks’ financial statements. But having banks prepay those few pennies will add up to $45 billion that will replenish the FDIC fund.

The other, more important question is this: Will this $45 billion be enough? By the FDIC’s own estimate, they’ll need at least $50 billion to get through the end of 2010. Asking banks to pay their assessments through 2012 right now leaves a gap of two years when the FDIC can expect zero income from its main source but will still have to close down troubled banks. A taxpayer bailout will be inevitable.

The fact that Sheila Bair–the only top regulator in this country who’s been outspoken about the causes of the crash–can’t turn to either the Obama administration or to Congress to replenish the FDIC’s fund is a symptom of just how sick our system is. She’s betting that things will get better between now and next year, that new financial regulation will be in place, that the economy will turn a corner, and that Congress and the American people won’t view a request from her to replenish the FDIC’s fund with taxpayer money as a taxpayer bailout that marks her as the same kind of leach as Kenneth Lewis of Bank of America or Franklin Raines of Fannie Mae.

I hope she’s right–but I don’t think she is. All indications are that banks are in for another round of collapses, this time sparked by commercial real estate loans.

Many banks are using an accounting trick called “interest reserves” to hide the bad commercial loans on their books. When a risky construction loan is made, a bank may choose to calculate the interest on the loan and put that money in a special account called an “interest reserve.” The bank essentially pays the interest on the loan to itself, absolving the debtor from having to make any payments for a certain period of time. These loans are often made to real estate developers who won’t get any income from their new property until they’re done building a new building and leasing it out or selling it. The interest reserve account, however, makes the loan look like a performing loan on the bank’s balance sheet when it’s not; it’s just a risky IOU that will only be paid back if the developer finishes building his project, leases or sells it, and stays in business long enough to pay all his debts.

The collapse of the real estate market has brought bankruptcy to many real estate developers, and banks are ending up owning semi-developed properties that they can’t sell or manage. The use of interest reserve accounts is widespread in the banking industry, but bank regulators are complaining that many banks are resisting the need to write off these bad loans and do away with their interest reserve accounts. Banks are hoping that the real estate market will pick up and they can sell those properties. But with most companies downsizing and commercial vacancies high, the future doesn’t look so good for US banks.