Word: fdic
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...helped by such local remedies, even in a city known for its large population of oil multimillionaires. The next day, the Federal Deposit Insurance Corp. announced that the institution would probably have to be written off as a failure and merged with a healthier bank to keep the FDIC's losses to a minimum. The agency loaned First National $ 100 million to keep it alive while merger bids were sought. It was one of the largest FDIC loans ever made to a distressed bank...
...week's end the Government announced that the high bidder was Dallas' Republic Bank (deposits: $11.9 billion). Republic assumed the bank's estimated 76,400 accounts and planned to reopen its doors this week; the FDIC will collect First National's bad loans. The passing of the institution into the hands of out-of-towners left some Midland residents gloomy. Said Mayor Thane Akins: "I feel like hanging a black wreath on my door." The merger was one of the largest commercial bank failures in U.S. history, based on the institution's deposits...
...directors, who include some of Texas' wealthiest oilmen, pledged to pump in some $40 million. But First National had drilled itself too deep a hole. Its percentage of nonpaying loans (about 25% of assets) is the highest of any large bank in the U.S. By the time the FDIC stepped in last week, the Federal Reserve had already extended $664 million in emergency loans...
When state regulators became aware in July of the firm's false claim that it was FDIC-insured, Rewald's world began to unravel. The IRS and Securities and Exchange Commission started probing Rewald's affairs early this year. State officials issued investigative subpoenas in late July after Rewald's firm published Capital Flight from Hong Kong and How Hawaii Can Benefit, a report so transparently amateurish that it instantly raised eyebrows in Honolulu's financial circles. A few days later Rewald checked into a Waikiki hotel and slashed his wrists. Wong is in Honolulu...
Part of the blame for the rising number of failures belongs to the recession and its complement of bankruptcies and defaulted loans. But increasingly, the problems are due to poor bank management. Says an FDIC attorney: "We find examples of actionable negligence on the part of bank officers and directors in virtually every case of a closed bank...