Word: sharpstown
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Even during the Great Depression, none of Houston's banks failed. Last month, however, the queues began forming each day before dawn outside the defunct Sharpstown State Bank as depositors applied for payouts from the Federal Deposit Insurance Corp. The agency was making good on accounts -but only up to $20,000 each. About $16 million seemed, for the time being, lost to depositors...
According to the SEC complaint filed in federal court, the scheme became operative in July 1969. Houston's Sharpstown State Bank, like many others, was pinched for funds because of the ailing economy. Legislation desired by Sharp was introduced at a special session of the state legislature that could have given state-chartered banks and perhaps insurance companies tremendous advantages. The measures, actively supported by Governor Smith, would have allowed a state-chartered organization to assume the functions of the FDIC in Texas. The ceiling on insured deposits, then $15,000 under FDIC, would have been raised...
...however, that he has done nothing wrong. Joseph Novotny, former president of Sharp's bank, told investigators of getting a request from an intermediary to destroy the records of Smith's and Baum's transactions. Announcement of the SEC charges last month produced the run on Sharpstown State Bank that led to its closing down...