Word: start
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Dates: during 2000-2009
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Last fall, soon after Congress decided it would spend $700 billion to shore up the nation's flailing financial system, about 100 shareholders of Reunion Bank of Florida gathered for a party. Over crab fondue and London broil, they toasted the start of their spanking new bank. It had been decades since a locally grown bank had opened in Tavares, an old citrus hub about an hour by car from Orlando. "We had folks drive from 45 miles away," recalls Reunion co-founder and CEO Mike Sleaford. "Everyone was so excited...
...amid all that carnage, there's celebration too. The industry as a whole may be reeling from bad loans and investments, but start-ups like Reunion don't have to wrestle with those problems. Entrepreneurs like Sleaford, even in hard-hit Florida, are setting up shop with completely clean balance sheets. They've got millions of dollars in fresh capital to write loans - and to pursue borrowers cast aside by banks focused on mopping up the mess from the years of excess. "New banks see people having a tough time getting loans, plus their funding costs are cheap since rates...
Bankers get that. Since last summer, at least 30 groups have filed to start new banks, according to SNL Financial. From Richmond, Va., to Tulsa, Okla., to Pacific Palisades, Calif., community bankers are hitting the pavement, raising funds a few hundred thousand dollars at a time from stock-market-wary investors. It's not an easy sell, and regulators, spooked by the wave of failures, are making it tougher than ever to win approval. For entrepreneurs who can run that gauntlet, though, the stars are aligned for small independent banks in a way they probably never will be again...
Last March, when Kenneth LaRoe set out to start a bank in Eustis - the next town over from Tavares - the speed bumps were already starting to pop up. Building a bank was old hat to LaRoe. The one he founded in 1999, he sold to a larger company in 2006, quadrupling investors' money. This time around, he lined up $24 million in commitments in three months. Then came IndyMac. On July 11, the FDIC moved to take over the nation's seventh largest savings and loan, a casualty of aggressive home lending and one of the biggest bank failures...
...full, given that FDIC coverage has been raised to $250,000 and seems effectively without limit at bigger banks) and passed the cost on in the form of lower interest rates than on, say, an uninsured money-market account. That, plus the fear that panicked depositors could start a devastating run on the banking system, explains why we're going to continue to be protected. (See the worst business deals...