Click the image to enlarge and read. A time zone away in deepest Dixie, (Fort Meyers, Florida), while geographically quite unlike the three bank takeovers Central Bank has engineered in Minnesota, the voracious firm strikes again. If you recall, it was the Halloween weekend, or the weekend before, that Central Bank took weekend cutover control of the Mary Kiffmeyer-related Riverview Community Bank, Otsego, MN.
http://www.centralbnk.com/body_riverviewcustomers.htm
http://www.centralbnk.com/body_CommerceBankSWFLcustomers.htm
In each instance there was FDIC "by agreement" eating $20 million of each failure, (as was widely reported in Minnesota for the Otsego bank takeover).
How does FDIC allow the bailout pool, supported by healthy and prudently run (though presently quite stressed) community banking to suffer such depradation, twenty million at a pop, to favor a single firm in repeated takeover lust?
Is it a secret procedure, secret handshakes and all, or is there sunshine on the process with it all shown to be on the up-and-up via multiple easily findable links and pages on the FDIC's website? Perhaps only people at FDIC know that answer. And they are not overly open communicating it to the blogging press. "Pursue FOIA" is the basic answer I so far have seen, even for the simplest of questions such as who was the authorized signing counterparty for the April 2009 stipulation to entry of a Cease and Desist order against the Otsego "Christian" bank - a stone wall, (not called that but "pursue FOIA" means little else), and "pursue FOIA" as a response from the FDIC's designated answer man, David Barr, begs the question entirely.
A person wanting to give a helpful answer would give one.
Aside from questions that naturally arise around a question of stone walling, STRIB this Friday carried the AP wire feed on the Florida bank, stating in part:
Central Bank, based in Stillwater, Minn., agreed to assume the deposits and assets of Commerce Bank of Southwest Florida. The failed bank's sole branch will reopren Monday as a branch of Central Bank. [...]
The failure of Commerce Bank is expected to cost the federal deposit insurance fund about $23.6 million.
It was the 12th failure of a Florida bank this year. Failures also have been concentrated in California, Georgia and Illinois.
As the economy has soured, with unemployment rising, home prices tumbling and loan defaults soaring, bank failures have accelerated and sapped billions out of the federal deposit insurance fund. It has fallen into the red.
[emphasis added]. Subsequently, Chris Serres wrote his own version of the story, quite shortened (presumably as previously where mention of Mary Kiffmeyer was surprisingly dropped because of online page length concerns), removing mention of the amount of the subsidy accorded Central Bank this go-round, and removing mention of the dire straits FDIC actions with so-far failed banks has caused their managed depositor bailout pool http://www.startribune.com/business/70656437.html, Serres writing only:
Central Bank of Stillwater, continuing to hunt for bargains among failed banks, agreed late Friday to buy a small Florida bank seized by regulators after too many of its commercial real estate loans went bad.
It was Central's fourth acquisition of a failed bank since August, and the first one outside Minnesota. Taken together, the failed banks had $700 million in assets, which means Central, which had $430 million in assets as of June, has more than doubled in size in just three months.
Central agreed to buy Commerce Bank of Southwest Florida in Fort Myers, which had $79.7 million in assets and deposits of $76.7 million, after the bank was seized by the Federal Deposit Insurance Corp. late Friday.
As part of the deal, Central Bank agreed to share losses on about $61 million of Commerce Bank's assets.
Central Bank did not pay a premium for the deposits, which suggests the FDIC had trouble finding many bidders. In many failed-bank deals, the acquiring institution pays a percentage, often 1 to 2 percent, of the failed bank's deposits.
Central also has acquired Mainstreet Bank of Forest Lake, Riverview Community Bank of Otsego and Jennings State Bank of Spring Grove, Minn. The largest of these was Mainstreet, which had $459 million in assets when it collapsed Aug. 28.
Like many failed banks, Commerce Bank had a heavy concentration of commercial real estate loans.
"Couple that with the weak real estate market in the general area where it operated, and the loan-related losses depleted earnings, causing it to fail," said Greg Hernandez, a spokesman for the FDIC.
[Again, emphasis added.]
STRIB published its own Oct. 24 report on the Riverdale Bank takeover by Central Bank, stating in part:
Early in its life, Riverview had a reputation for mixing faith and finance. Chuck Ripka, one of the bank's founders, once told the Star Tribune that God spoke to him and said, "Chuck, if you pastor the bank, I'll take care of the bottom line." Ripka and his staff would pray with customers in the bank's Otsego branch and even at the drive-up window. In a 2004 New York Times story, Ripka said he occasionally slipped up and said, "Come on over to the church -- I mean the bank."
Riverview was among a slew of small community banks that got their start earlier this decade and expanded aggressively. Another of these upstart firms, Brickwell Community Bank of Woodbury, was shut down in September.
The FDIC and Central Bank have entered into an agreement in which the federal agency and the bank will share in the losses on about $75 million of Riverview's assets. The FDIC said it estimates the cost to its insurance fund will be $20 million.
[Again, emphasis added.] And don't just take my word on the story scrubbing, here's the screenshot of the earlier version, p.1,
Compare the scrubbed, Serres version:
So, you tell me. What is FDIC doing? (Indeed, what is Strib doing?) Why is the depositer bailout pool eating such big subsidy bites out of the to-be-tithed-but-yet-healthy banks? The other sound banks in the nation will have to put in cash in order to replenish the depositer bailout pool? Why is Strib now removing such news from its online reporting?
Bottom line: Why the sensitivity on different fronts about twenty million at a pop subsidies favoring the one Stillwater Minnesota bank, Central Bank, out of a bankrupt FDIC bailout pool?
What is news and what is not? The BIG editorial question we each can ask.
Presuming a rationale exists for how FDIC goes about arranging bailouts and how it favors one bone picker over another, why will FDIC not simply publish facts of that rationale on their webpage?
Or have they, and I am too ignorant to find them?
You tell me, which is it.
David Barr will not tell me, so somebody, please help.
__________UPDATE___________
There has been traction for the Audit the Fed idea. At least it has gotten out of committee despite committee leadership ambivalence.
It perhaps is time for an Audit of the FDIC also.
The particular question I would want an audit to examine, is how FDIC operated in 2007-2008, in the tail end of the Bush term after the 2006 Democratic landslide, as to whether there was laxness or unwillingness to call the community banking situation for being as bad as it was then, so that the Bush people could exit and hand it off to successors and to then have the Bush party do finger-pointing as if the successor administration was responsible.
And of course at the time when Wall Street was being bailed out, what about the little banks, the small businesses, being ignored as second class citizens.
Deliberate delay would be dishonest, but not out of character for the Bush-Cheney-Paulson types in their eight years in the saddle. They did much to question.
Now, is the FDIC current wave of shutting down banks something that, done earlier, might have been far less costly to the economy? Might it have been averted if the powers in DC had paid as much attention to the little guys left holding real property default situations, as was paid to the big players holding securitized real property situations after THEY had been the ones fanning the flames and doing the securitization.
Or am I wrong?
Bottom line: Somebody should investigate that, and given the FDIC as a federal institution, it seems it should start with an audit, in parallel to an audit of the Fed. Until there is that kind of fact-finding, we all can speculate on responsibilities and possibilities of collusion - and only facts can affirm or dispel such worry.
_________FURTHER UPDATE_________
1. On the FDIC's rule making effort to have healthy banks prepay three years of assessments to make the depositor-bailout fund solvent; here.
2. Because of Strib pulling the AP feed for the watered-down locally written version, let us say shortened, only the first page screenshot was attained as shown above. For the full AP feed, see here, including sobering numbers in a sobering context:
Since some of the banks already were under scrutiny before they received money, the enforcement records also raise questions about how officials decided which banks should get taxpayer money that wasn't supposed to be at risk.
The FDIC expects the cost of bank failures to grow to about $100 billion over the next four years.
Depositors' money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. The FDIC still has about $21 billion cash in loss reserves apart from the insurance fund. It can also tap a Treasury Department credit line of up to $500 billion.
Banks have been especially hurt by failed real estate loans. Banks that had lent to seemingly solid businesses are suffering losses as buildings sit vacant. As development projects collapse, builders are defaulting on their loans.
If the economic recovery falters, defaults on the high-risk loans could spike. Many regional banks hold large concentrations of these loans. Nearly $500 billion in commercial real estate loans are expected to come due annually over the next few years.
The 124 bank failures are the most in a year since 1992 at the height of the savings-and-loan crisis. They have cost the federal deposit insurance fund more than $28 billion so far this year. They compare with 25 last year and three in 2007.
The number of banks on the FDIC's confidential "problem list" jumped to 416 at the end of June from 305 in the first quarter. That's the most since June 1994. About 13 percent of banks on the list generally end up failing, according to the FDIC.
[emphasis added] Small bank failure is big news, and will get bigger, and federal handling should be audited, sooner being a better time to begin than later.
Big news, due to get bigger, and Strib pulls it and you can go back and see what their don't-worry-be-happy editorial view substituted. I guess it's a matter of perspective. But the truth is, the longer the truth is shunted aside the greater will be the blaming of the present elected officials in Washington for what is a failure of the past, not of the present.
Blame might be misplaced if truth now is suppressed.
I suppose it's as the Gipper and Thatcher in a years ago duet in a separate but similar hose the little guy context said, "You ain't seen nothing yet."
3. As to possibilities of favoritism, the key question of the post, The Street, at p.2 of this post notes:
Many bank holding companies are taking advantage of the crisis to grow their deposit bases by taking over failed institutions, often aided by generous loss-sharing agreements with the FDIC.
Large holding companies acquiring failed institutions during 2008 and 2009 have included J.P. Morgan Chase(JPM Quote), which acquired Washington Mutual, the largest-ever bank or thrift to fail in the U.S.; U.S. Bancorp(USB Quote); SunTrust Banks(STI Quote); Regions Financial(RF Quote); Fifth Third Bancorp(FITB Quote); Zions Bancorp(ZION Quote); PNC Financial(PNC Quote); and BB&T(BBT Quote).
[bolding and links in original omitted]
4. See also; here, here, here, here, here, here, here, here, and, again, here.