No bank failures today, but seven officers of failed First National Bank of Savannah indicted

January 11, 2013 17:50 pm

by Bill Dawers · 6 comments

Far fewer banks failed in 2012 than in 2011, and the FDIC has made especially little news over the last couple of months.

Just one bank failed in the entire country in December — and only three failed in November. (Click here for the complete list of failed banks.) Georgia still leads the nation in bank failures since the housing bust, but it seems that a large majority of the state’s troubled banks will survive. Still, it’s worth noting that there about 70 Georgia institutions on the unofficial problem bank list published by Calculated Risk.

So we will certainly see more failures, and I’m guessing that we’ll see more federal prosecutions of officers of failed banks.

From the Savannah Morning News’ First National Bank of Savannah officers indicted in multimillion-dollar fraud:

The former president and six other officers of First National Bank of Savannah were indicted by a federal grand jury, accused of defrauding First National Bank and other banks out of millions of dollars.

The long-running scheme allegedly contributed to the failure of First National Bank in 2010, which will cost the FDIC deposit-insurance fund more than $90 million, according to a press release from the Department of Justice’s Southern District of Georgia.

Former president and CEO Heys Edward McMath III has been charged, along with six other officers. All seven have been indicted for bank fraud and conspiracy, among other charges.

As I have been saying for several years now, one would hope (dream?) that Georgia lawmakers would take a hard look at how state regulations and enforcement — or the lack thereof — might have contributed to what a friend of mine calls the “wild west lending” of the housing boom.

 

IndyInjun January 11, 2013 at 8:28 pm

For something like 5 years in a row in the early 2000’s Georgia was #1 or #2 in mortgage fraud according to the Mortgage Bankers Association.

Over 2000 real estate appraisers petitioned the government, citing massive fraud.

2 years ago the statewide Texas ratio for Georgia was the worst in the US – nobody else was close – at 95, with 100 suggesting bank failure.

Both GA Senate and House Banking Chairmen have had “issues” with bank failures.

Paul Broun and his brother were in a failed bank.

Every reform proposed last session got killed at the behest of the Georgia Bankers Assn.

Dave Bearse January 11, 2013 at 10:57 pm

Not unexpectedly, the banks too big to fail are still too big to fail. Likewise the bankers that caused the bust by securitizing junk mortgages as investment grade securities continue to collect 7-8 figure salaries.

The feds going after small bankers is like preosecuting the corner drug dealer selling $10 rocks, while the syndicate suppliers simply rock on.

IndyInjun January 11, 2013 at 11:44 pm

Agreed. I recently calculated the Texas ratio for all banks in our region. Bank of America scores better solely by virtue of the astronomical (IIRC $62 billion) government-insured ‘assets’ on its books.

Still, the FIRE (Finance, Insurance, and Real Estate) sector across the board got to more than 40% of the economy from in the low 20’s. Unneeded local banks are all over the place. In order to artificially prop up FIRE at 40%, they are keeping these market-doomed banks open in every town in Georgia at the expense of savers.

60% of the banks in Georgia are not needed and should be closed. As it stands, they are a huge highly-paid make-work program at our expense.

Dave Bearse January 11, 2013 at 11:42 pm

Perhaps not unexpectedly, the banks that are too big to fail are yet too big to fail. And not unexpectedly the big bank management that was responsible for the bust by securitizing junk mortgages as investment-grade securities are still collecting 7-8 figure salaries.

It’s remotely comparable to the illegal drug trade prosection of the corner dope dealer selling $10 rocks while the syndicate responsible for the products rocks on.

seekingtounderstand January 12, 2013 at 12:57 pm

Did you know that there are only two safe banks in Georgia. Both will not longer take new customers. Both are in rural parts of Georgia.

IndyInjun January 12, 2013 at 2:23 pm

There is only one bank rated A in east central Georgia.

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