On Dec. 21, the U.S. House of Representatives passed H.R. 2056, legislation sponsored by Georgia District 3 Rep. Lynn Westmoreland and Senator Saxby Chambliss, and sent it to President Obama for his signature.

The legislation will conduct studies looking into potential causes for the high number of bank failures across the United States. Even though financial markets have somewhat stabilized since the dramatic drops in late 2008, 140 banks failed in 2009 and another 157 failed in 2010.

Georgia leads the nation in bank failures, with more than 73 failed banks since 2008.

“When I ask federal regulators why so many banks in Georgia and across the country have failed and continue to fail, I’m given dozens of different excuses, but no real solutions to stopping this epidemic,” Westmoreland said. “Community banks are the economic engine of our towns and cities, and the large number of failed banks in Georgia can have a devastating effect on our economic recovery.”

Westmoreland added that without these local lenders, job growth and economic investment can dry up. He cited statistics showing that the 10 states with the highest number of failures also have some of the highest unemployment and foreclosure rates in the country.

“Hopefully, this legislation can lead to answers to not only what’s behind these bank failures but also answers to how we can make sure this doesn’t happen again in the future,” he said.

With more than 400 bank failures across the country since 2008, Chambliss said the legislation is needed.

“It is clear that Congress needs more information about the underlying causes of these bank failures,” he said. “If there is a better way to resolve this crisis, we must pursue it. This bill is the first step to doing that.”

The legislation would provide for two studies — one conducted by the Inspector General of the FDIC and one by the General Accounting Office (GAO) — to look into the impact some of the policies and procedures of the FDIC, including loss-share agreements and paper losses, and whether they may have negatively affected troubled institutions.

The studies would look at banks in the 10 states with the highest number of failures — Arizona, California, Florida, Georgia, Illinois, Michigan, Minnesota, Missouri, Nevada, and Washington.

The legislation was initially introduced in May of 2011 by Westmoreland. It passed the House in July and was sent to the Senate for consideration. After being amended by the Senate in November, it was sent back to the House for final passage.