Saturday, January 31, 2009

Friday evening at the FDIC - three more bank failures

Friday evening the FDIC announced that it had closed three failed banks:

  1. MagnetBank, Salt Lake City, Utah. The FDIC was unable to find a purchaser, so they will simply mail checks to insured depositors. The FDIC "estimates" that there were no uninsured depositors.
  2. Suburban Federal Savings Bank, Crofton, Maryland. Bank of Essex, Tappahannock, Virginia, assumed all of the deposits, even any that might have been uninsured.
  3. Ocala National Bank, Ocala, Florida. CenterState Bank of Florida, Winter Haven, Florida, assumed all of the deposits, even any that might have been uninsured.

That brings to 6 the number of failed banks in 2009.

The FDIC does not give any advance notice of bank closures. In fact, it is usually a state banking regulator who does the closure and then FDIC is "named receiver" and then takes over and promptly arranges to sell as much deposits and assets as it can to a healthier bank.

The basic idea is to totally avoid old-fashioned "runs" on banks and pre-arrange the assumption of deposits by a healthy bank before the closure is even announced. In other words, there should be no disruption of service and no need for customers to lose any sleep.

-- Jack Krupansky

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