NetBank becomes NotBank

My fiancee was not amused……

WASHINGTON – An online bank with $2.5 billion in assets was shut down by the government on Friday because of an unsustainable level of mortgage defaults.

The federal Office of Thrift Supervision said it appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta, Ga.-based NetBank Inc. The FDIC said $1.5 billion in insured deposits will be assumed by ING Bank, part of Dutch financial giant ING Groep NV.

NetBank, which had no physical branches, “sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies,” the OTS said in a statement.
Regulators shut online bank NetBank – Yahoo! News

20 comments

  1. GabrielSterling says:

    So glad I got my deposit in at 12:40. Then I go online at 3:25 and see the FDIC tag up on the site saying “come back later”.

  2. StevePerkins says:

    What a freaking day! A couple of weeks ago I ordered a new Toyota Prius (insert environmentalist/socialist joke here), and shifted $10,000 from my brokerage account to my NetBank checking account in preparation for the down payment. Just before getting off work and heading over to the dealership to pick up my car, I went online to double-check my account balance one more time. I saw a splash page saying that the goverment had shut down my bank. I nearly crapped a Toyota Prius in my pants! Of all the days for this announcement to come out… TODAY?!?

    Supposedly I’m already a customer of ING now (the company that’s buying out NetBank’s assets), and the check I just wrote should clear the bank. However, my new-car joy is overshadowed by the apprehension that I’ll be looking over my shoulder for the repo man over the next several days!

    I became a NetBank customer in the first place 5 or 6 years ago when they bought out CompuBank, my first Internet bank account that went belly-up. As much of a technology guy as I may be, I think on Monday morning I’ll be switching my paycheck direct deposits over to a credit union account and saying farewell to banking through the series of tubes they call the Internets.

  3. Hmm, secondary to our Banking Committee, elected leaders whose watch this is happening under, you can hold these Corporate, white collar guys personally responsible. It’s interesting that there were no insider purchases since March of 2007:

    Mr. Steven F. Herbert , 50
    Chief Exec. Officer

    Mr. Charles E. Mapson , 49
    Chief Legal Exec., Chief Legal Counsel and Sec.

    Mr. James P. Gross ,
    Chief Financial Officer

    Mr. R. Theodore Brauch , 48
    Chief Risk Exec.

    Mr. Joyce Bellows
    Officer

    NetBank Inc.
    1015 Windward Ridge Parkway
    Suite 100
    Alpharetta, GA 30005
    United States
    Phone: 770-343-6006
    http://www.netbank.com

    sweet dreams, thank the good lord for your mattresses…

  4. I think they call this “Trickle Overseas Economics” aka the “TOE” theory, you heard it here first at Peach Pundit…

    Excerpts:

    “US Dollar Beaten to a Pulp; Is Euro 1.50 Next?”

    Friday September 28, 5:39 pm ET
    By Kathy Lien, Chief Currency Strategist [email protected]

    – Canadian Dollar Hits 31 Year High, Australian Dollar at 18 Year High
    -Euro taking out 1.42

    “Slower growth and rising inflationary pressures resurrect the risk of stagflation. The last time we had serious stagflation problems was in the early 1980s.” “For most companies, expansion is probably the last thing on their minds at the moment.”

  5. Harry says:

    What, you’re waking up to all this NOW?

    Meanwhile, the congress just increased the debt limit by one more trillion….keep on arranging the deck chairs.

  6. Harry says:

    Meanwhile, back to the important stuff: The real story behind Liz Taylor’s plan to marry husband No 9.

    Why does this feel like the Roman Empire.

  7. Harry, i’ve been yelling about this since 2002 but that is neither here nor yonder as Macon, Georgia was able to assemble 2,000 people to blow on a kazoo and the weatherman from CBS came down to show the world how fat and happy everyone in poverty riddled middle georgia is. Kazoos don’t work when you blow on them, just like ethicsless governments you gotta just shutup, hum along and play dumb.

    This feels like the Roman Empire because it is the Bush/Cheney/Carlyle/Haliburton/Saudi/Catholic/PseudoChristian/Neoconchickenhawk/dumbass/lemming/pseudoconservative/greedyrottenbastard Empire…

    104,000 Netbank Customers are now owned by Netherlands ING for a paltry 14 million, 140 per head. Of course ING only took the customers that were covered by FDIC. Was there a competitive bidding process or did the FDIC overlords say, here, take this piece of the spoiled American pie, they are too stupid and corrupt to stand up to anything these days?

    China could buy US on the open, free market right now and i still can’t read a damn bit of chinese…

    adios, go shopping, kmart has a sale on velcros…

  8. Harry says:

    Do you know what is the national defense percentage of the total budget, and how it has trended over the years?

    Anyway, those caring Dems just raised the federal debt ceiling another trillion (with a t) so the issue hopefully won’t have to be revisited again until after the election. However, as the dollar goes down maybe a trillion ain’t enough for the next 14 months. After all, they gotta raise enough to feed and provide housing and health care to all those voters!

  9. joe says:

    Harry // Sep 29, 2007 at 9:19 pm

    Do you know what is the national defense percentage of the total budget, and how it has trended over the years?

    This question actually needs to be answered. Too few people actually know.

    GAO-07-226CG:

    1965 43%
    1985 27%
    2005 20%

    Gee, we must be spending a lot on the war.

  10. WASHINGTON (AP) — Bear Stearns Cos. Inc., the nation’s fifth-largest investment bank, paid Steptoe & Johnson LLP $100,000 in the first half of 2007 to lobby the federal government, according to a disclosure form.

    The firm lobbied on Securities and Exchange Commission oversight of mutual funds and hedge funds and other securities legislation, according to the form posted online Sept. 18 by the Senate’s public records office.

    New York-based Bear Stearns managed two failed hedge funds that were forced into bankruptcy this year after it made losing bets on securities backed by subprime loans, which are made to borrowers with risky credit.

    http://biz.yahoo.com/ap/070927/bear_stearns_lobbying.html?.v=1

  11. Brush up on your Chinese Boyz and learn a new meaning for the color Red.

    So you think you are saluting the American Flag when you deposit money in a financial institution with an American Name?

    9/28/07
    http://www.thestreet.com

    Bear Stearns has reportedly been courting a Chinese investment for some time. The Wall Street Journal reported in April 2006 that chief executive James Cayne met with China Construction Bank to sell the firm a $2 billion to $4 billion stake via a convertible bond offering.

    The paper reported then that because the arrangement was a convertible bond, as opposed to a direct equity investment, the structure of the deal allowed the Chinese bank to avoid regulatory hurdles.

    Indeed, convertible sales are convenient ways for investors to amass stakes in companies while avoiding shareholder votes and occasionally regulatory hurdles.

    A “RedState” Owned Banking Institution?

    Earlier this spring, China’s state-run investment unit agreed to take a $3 billion stake in Blackstone Group prior to its initial public offering.

    The state-run investment fund will officially launch on Saturday, according to reports, and it will put $200 billion of the nation’s $1.3 trillion currency reserves to work in the global marketplace.

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