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Saturday, November 07, 2009

Strib Financial writer Chris Serres has been doing a continuing series of reports on bank failures and workouts.

For the sequence of reporting by Serres, this link.

The most recent item he wrote, this Friday, about the Friday closure of Prosperan Bank.

I urge readers to have a look, since it is a situation reflecting the overall economic shake out [shake down was a separate thing, the Paulsen, Bernanke, Bush and the TARP players on Wall Street and in Congress].

One thing I hope Serres would do is a focused series looking in detail at one bank, (his choice of which to autopsy), to see if he can get involved persons to talk about what real estate segment [if a single one] caused the failure, whether management might by better judgment have avoided closure, etc.

And hopefully besides his recent reporting on the big end of things, (his item on US Bancorp chain acquisition activity, and an earlier report on the same Minnesota based institution acquiring other assets besides its most recent takeover of an entire outlet chain), might be supplemented by a look at a smaller community bank acquisition target and takeover firm pairing, to report how things get done behind the specialized legal practice and non-public FDIC and Fed closed doors, and how with State chartered banks how the "shared burden of regulatory oversight" works out in actual practice and not just under issued platitudes from the players about doing their best.

Sometimes best is not enough, and I expect sometimes there is politics afoot. And when testifying before legislative fact-finding committees there often is the circle-the-wagons attitude of the regulatory system under scrutiny, and the don't-rock-the-boat-but-look-attentive motivations affectiing scrutinizing legislators who might be dwarfed in expertise by the players in the game.

In any event, it is a good reporting series on which Strib has allowed Serres to focus. They deserve praise and appreciation for that editorial decision.

________UPDATE__________
From the Prosperan Bank report, link given above, the paragraph I found most interesting:

Missy Keney, a spokeswoman for Alerus, said the bank was still reviewing Prosperan's loan portfolio and did not know how the bank's financial position changed so abruptly. "We're not sure if it's them just not recognizing the bad loans, or they did know and just not say anything," she said. "We just don't know."


That is a most delicate way for the acquiring firm's spokesperson to phrase things.