Posts Tagged: Federal Deposit Insurance Corporation

FDIC: Bank in affluent Chicago suburbs keeping their loans in affluent Chicago suburbs

The FDIC claims that Community Bank of Oak Park River Forest is not keeping up its part of the bargain as a community bank.  Steve Daniels of Crain’s Chicago Business reports that the Federal Deposit Insurance Corporation accuses the suburban Chicago bank of “substantial non-compliance” with the Community Reinvestment Act — the 1977 law that requires banks to lend and invest in low-and-moderate income communities.

Only 14 of more than 7,500 banks inspected by FDIC officials have sunk to the level of “substantial non-compliance.” Community Bank’s problems partly lie with not investing in Austin, the very poor Chicago neighborhood just east of Oak Park.

Meanwhile, the bank failures keep coming

The Bank of Commerce, based in Wood Dale, Illinois was shut down by FDIC regulators Friday, reports Kalyan Kandy of Zacks Investment Research. That brings the number of bank failures this year up to 26, about the same pace as the number of bank failures in 2009 and 2010. Small banks continue to absorb the bad credit loans of the mid-aughts housing bubble (unlike big banks the smaller ones didn’t get bailouts). Meanwhile, the FDIC has struggled to stay in the black itself as it reimburses the customers of failed banks.

IG: Obama did nothing wrong with ShoreBank

Here is one Republican investigation of Barack Obama that may have hit a dead end. The Obama administration did not inappropriately try to save erstwhile Chicago community lender ShoreBank, concludes an FDIC inspector general report. Steve Daniels of Crain’s Chicago Business summarizes the report, requested by House Republicans who were suspicious that Barack Obama called on Wall Street giants to bail out a bank in the president’s former backyard. FDIC Chairman Sheila Bair, in fact, did call Wall Street firms but the “calls were motivated by reducing the potential losses to the FDIC’s insurance fund rather than any political favoritism.”

FDIC released a report last week on the irresponsible mortgage lending that lead to ShoreBank’s demise. The company’s remaining assets were merged into Chicago-based Urban Partnership Bank.

Anatomy of a bank failure

South Side Chicago's Woodlawn community

The Federal Deposit Insurance Corporation’s Office of Inspector General released a report yesterday (picked up by Lorene Yue of Crain’s Chicago Business)  that concluded Chicago’s ShoreBank failed in Aug. 2010 due to — you’re not gonna believe this — poor management and irresponsible mortgage loans. But while the community bank failed in the most generic way possible, a lot else about ShoreBank was extraordinary. (more…)

It’s unanimous — bankers should act like bankers

The Federal Deposit Insurance Corporation, the lead agency in setting conditions to keep banks stable and your bank account safe, says senior bankers will have to defer receiving 50% of annual bonuses for three years,  according to reporting by Eric Dash in the New York Times.  The FDIC, which took this decision unanimously, may also require senior bank executives to take their bonuses in cash instead of stock, in order to discourage them from taking undue risks.

There will surely be claims that this is creeping socialism, but as soon as it’s done (and as soon as these bankers get their first deferred bonus money after three years), this will be understood as a sensible control on people whose job it should be to invest other people’s money more wisely than they have in the past.

FDIC banks on lawsuits to recover money

Banks don’t like it when the Federal Deposit Insurance Corporation takes them over, but the FDIC doesn’t like it either — particularly when they must absorb all the failed institution’s losses. In order to recoup some of this money, the FDIC may sue up to 109 former executives of failed banks, reports Christine Ricciardi of Housing Wire. (more…)

Giannoulias off Broadway

Alexi Giannoulias

Steve Daniels of Crain’s Chicago Business picks up on a report released by the Federal Deposit Insurance Corporation on the failure of Chicago’s Broadway Bank, which FDIC seized in April and turned over to MB Financial. The report serves not just as a post mortem of the bank but the unsuccessful U.S. Senate campaign of Democrat Alexi Giannoulias who narrowly lost to GOP candidate Mark Kirk. But besides the Giannoulias link, Broadway’s failures are a generic example of the greediness and naivete of  lenders during the housing bubble. (more…)

Getting after bad bankers

With the news that the FDIC is investigating at least fifty banks and their top managers for possible criminal activity at “failed banks of all sizes in cities across the U.S.,” the public is finally getting some indication that those who profited from the country’s economic downturn may be punished.  Jean Eaglesham brings this story in the Wall Street Journal.  This investigation does more than reassure us that someone is looking out for our interests; it also gets at a nagging reality that emerged when some banks failed and some succeeded: (more…)

The regional bank shuffle

Crain’s Steve Daniels reports on details released by the Federal Deposit Insurance Corporation on the bidding process to acquire four failed Chicago banks. The process shows that while the failed banks and FDIC itself lose in a bank takeover, buyers of failed banks can come out winners. (more…)