Saturday, March 21, 2009

Friday evening at the FDIC - three bank failures

There were no bank failures a week ago, but Friday evening the FDIC announced that three banks were closed this past week:

  1. FirstCity Bank, Stockbridge, Georgia. No assuming institution could be located, so the FDIC will simply mail checks to insured depositors for their insured amounts.
  2. Colorado National Bank, Colorado Springs, Colorado. Herring Bank, Amarillo, Texas assumed all of the deposits.
  3. Teambank, National Association, Paola, Kansas. Great Southern Bank, Springfield, Missouri assumed all of the deposits.

That brings to 20 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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