bank with ties to the family of John McCain was shut down by federal regulators on Friday, marking the 11th US bank failure this year and threatening to cause ripples across the presidential election campaign.

Andrew McCain, son of the Republican presidential nominee, was a director of Nevada-based Silver State Bank until resigning in July for "personal reasons".

EDITOR'S CHOICE
In depth: US campaign 2008 - Sep-05Editorial Comment: Republican theatre - Sep-05Woman in the news: Sarah Palin - Sep-06US rivals clash on economy and job losses - Sep-05McCain seizes on theme of 'change' - Sep-05Video: US Daily View on McCain's speech - Sep-04He was a member of Silver State's audit committee, which has responsibility for overseeing the bank's financial accounts.

Silver State was heavily exposed to construction and land development loans that have come under pressure as the housing market slumps.

Much of the bank's business was concentrated in Las Vegas and other western cities that have suffered some of the sharpest falls in land prices after years of rapid growth and heavy speculation.

Silver State had about $2bn of assets and $1.7bn in deposits at the end of June and reported a second-quarter net loss of $72.3m.

Its failure is expected to cost the Federal Deposit Insurance Corporation, which insures bank deposits up to $100,000, about $450m-$550m.

There is no evidence that Mr McCain did anything wrong nor that his departure was connected to the bank's financial troubles.

But the episode is a potential embarrassment to his father at a time when bank failures are adding to a broader sense of gloom and economic insecurity among US voters.

It could revive memories of John McCain's role in the "Keating Five" scandal during the 1980s savings and loans crisis, when he was reprimanded by a Senate watchdog for lobbying on behalf of a campaign donor whose mortgage lending institution was under investigation by regulators.

The younger McCain joined the board of Silver State in February after it acquired Arizona-based Choice Bank, for whom he had served as a director since 2006.

He is an adopted son from his father's first marriage but also has close ties to the senator's second wife, Cindy, in his role as chief financial officer of Hensley & Co, the Arizona-based beer distribution company controlled by Mrs McCain.

The 11 bank failures in the US this year compare with three in all of 2007 and none in the preceding two years. More are expected.

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Ah, well; at least he was born normal. Maybe sex ed is not the only gap in the educational hierarchy of understanding.

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