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Is this bank seizure (or 2 or 3) per week pre-scheduled and phased to avoid a mass panic?

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marmar Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 10:41 AM
Original message
Is this bank seizure (or 2 or 3) per week pre-scheduled and phased to avoid a mass panic?
Freedom Bank of Georgia Seized, 17th U.S. Failure This Year
By Margaret Chadbourn and Ari Levy


March 7 (Bloomberg) -- Freedom Bank of Georgia was seized by regulators, the 17th bank closed this year, as the recession persists and a jump in unemployment pushed more borrowers behind on home loan payments.

Freedom Bank, in Commerce, Georgia, with $173 million in assets and $161 million in deposits, was shut by the states Department of Banking and Finance and the Federal Deposit Insurance Corp. was named receiver. Northeast Georgia Bank of Lavonia, Georgia, will assume deposits, the FDIC said.

Customers of both banks should continue to use their existing branches until Northeast Georgia Bank can fully integrate the deposit records of Freedom Bank of Georgia, the FDIC said.

The U.S. economy is in the second year of a recession caused partly by a collapse of the housing market and losses in the financial system linked to mortgage securities. The U.S. unemployment rate reached 8.1 percent, the highest level in more than a quarter century, and employers shed 650,000 jobs last month, the Labor Department said.

Closely held Northeast Georgia Bank will buy about $167 million in assets at a discount of $13.7 million and the bank agreed to share with the FDIC in any losses on about $96.5 million in assets. The FDIC estimates the transaction will cost the deposit insurance fund, supported by fees on insured banks, about $36.2 million. ........(more)

The complete piece is at; http://www.bloomberg.com/apps/news?pid=20601087&sid=a0p...





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TBF Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 10:46 AM
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1. Makes you wonder doesn't it?
I figured the fix was in when Paulson pulled his little coup under Bush (that the Fed was manipulating behind the scenes), but I hadn't thought about it continuing into this administration. You know airline pilots always say every landing is just a "controlled crash". That's what we may be currently watching with the banks.
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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 10:59 AM
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2. I doubt it, but delaying it until Friday evening is.
Not only does it miss the weekday news cycle, hitting when people are out shopping after they get that paycheck, they are also giving those depositors and everybody else in town a weekend to come back to earth and stop panicking about the temporary closure of their bank.

It's really important to keep a month's cash stashed, preferably in a place that requires a ladder and flashlight to retrieve so that it is unattractive to thieves, just in case one's own bank or credit union is taken over by the FDIC.

And yes, I've taken my own advice.
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Pab Sungenis Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 10:59 AM
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3. Yes.
There was a story about it on NPR a week or two ago. The regulators are poised to go in well in advance. Shortly before the appropriate time they are told where they are going and travel arrangements are made. They're sworn to secrecy, even to their families, about where they're going to avoid panic.

Then, right before the close of business on a Friday, they swoop in quickly to take control. This minimizes panic and prevents a bank run, plus it keeps those who might have been guilty of wrongdoing from taking what is left and absconding.
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 11:25 AM
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4. They have a limited number of people to staff the teams that close banks
So they have to spread them out.

They will be recuiting more staff.
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peace13 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 11:41 AM
Response to Original message
5. This has been going on since at least last fall.
My friend travels from bank to bank closing them down. He never knows what city he will be going to until he gets to the airport and gives his name. We are at least seven months into this.
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BR_Parkway Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 12:03 PM
Response to Original message
6. Interesting how many have been in GA - they must have been heavily involved
with the FL real estate market.
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