TOPIC: Federal Deposit Insurance Corporation

A regulator scorned? Why Sheila Bair’s gender matters

Sheila Bair

“[W]e were being ignored, and we had something to bring to the table,” Joe Nocera quotes the former head of the FDIC in the New York Times Magazine.  Bair was one of the few people at the top levels of government to push for more restrictions on investment banks and one of the very few to say that more banks should be allowed to fail.  It wasn’t just that the FDIC was a smaller agency than most, or that Bair was a Republican.  The reason Sheila Bair got no traction for her sensible views was often due, by all appearances, to the fact that she’s a woman. (more…)

Too male to fail: Budget negotiations missing fifty percent of the population

Where are the women?

Nowhere to be seen in discussions on the nation’s financial future, reports Kate Ackley of Roll Call in an article about the lack of women on the White House-Congress budget negotiation panel.  15 women’s organizations have asked the White House to include women in negotiations on the national budget between the White House and Congress. (more…)

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…)

Money (laundering) and medicinal marijuana

Granted expanded surveillance and oversight powers after the September 11 attacks a decade ago, federal banking regulators have been quietly tightening the noose on California’s semi-legal medicinal cannabis industry. (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.

Monday wake-up call: Angelides commission finds regulatory agencies inert in face of bank fraud

Gretchen Morgenson of the New York Times brings a cohesive and pointed review of the Financial Crisis Inquiry Commission’s report issued last week (number 46 today on Amazon’s best-seller list).  Not to depress you on a Monday morning, but Morgenson says the 576-page behemoth

makes for compelling reading because so little has changed as a result of the debacle, in both banking and its regulation.

She’s alarmed that the Federal Reserve, “defiantly inert and uninterested in reining in the mortgage mania,” now has even more power to regulate banks and their often-risky practices.  (more…)

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…)