OT: Banks that failed in 1999

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Friday February 4, 4:14 pm Eastern Time

U.S. Banks That Failed in 1999

By The Associated Press

U.S. banks that failed in 1999, the month in which they were closed by regulators and the cost to the deposit insurance fund, according to the Federal Deposit Insurance Corp.:

--Victory State Bank [OTC BB:VYSB.OB - news], Columbia, S.C., March, no cost to fund.

--Zia New Mexico Bank, Tucumcari, N.M., April, $1.6 million.

--East Texas National Bank of Marshall, Marshall, Texas, July, $6.2 million.

--Oceanmark Bank, North Miami Beach, July, $4.4 million.

--Peoples National Bank of Commerce, Miami, September, $2.2 million.

--First National Bank of Keystone, Keystone, W.Va., September, $750 million (estimate).

-- Pacific Thrift and Loan Co., Woodland Hills, Calif., November, $50 million.

--Golden City Commercial Bank, New York City, December, no cost to fund.

--The failure of BestBank of Boulder, Colo., which cost an estimated $232 million, occurred in July 1998 but was applied to the fund in 1999. <

-- Homer Beanfang (Bats@inbellfryl.com), February 04, 2000


http://ap.tbo.co m/ap/breaking/MGI1V7M9A4C.html

Feb 4, 2000 - 03:58 PM

FDIC Tells Examiners to Watch for Signs of Fraud By Marcy Gordon The Associated Press

WASHINGTON (AP) - The Federal Deposit Insurance Corp., hit by its biggest losses from bank failures since the early 1990s, is telling its examiners to keep alert for warning signs of possible fraud at the banks they inspect.

Fraud is said to have been a major factor in three recent bank failures, two of which cost the FDIC's insurance fund an estimated $982 million.

"We've learned some things from these cases," FDIC chairwoman Donna Tanoue said in an interview Friday. "We want to improve our performance."

Tanoue said the agency will commit "whatever resources are necessary" to investigate suspected bank fraud.

In a memo Thursday, James L. Sexton, director of the FDIC's Division of Supervision, reminded examiners of the importance of quickly beginning a thorough investigation when suspicious signs appear.

"When 'red flags' or other information lead to suspicions that fraudulent activity may be present, investigation should be accorded the highest priority, and resources should be allocated accordingly," Sexton said in the memo to regional supervision directors, for distribution to the agency's 1,800 examiners.

Among warning signs at banks that failed recently, the memo said, were bank managers and officials' refusal to cooperate with or hostility toward examiners; large proportions of risky loans; suspicious transactions by bank insiders; lack of internal controls; and inadequate record keeping.

In a related move last week, the FDIC proposed that capital requirements be doubled for banks that specialize in risky loans to people with inferior credit histories.

Regulators and lawmakers are concerned about the eight U.S. bank failures last year, which occurred within a booming economy. The eight collapses, and another one in late 1998, cost the FDIC about $1 billion last year, the most in a single year since the regional banking crises of the early 1990s.

Compounding the worry, the FDIC is predicting that as many as 20 banks could go under this year.

Already, on Jan. 14, Iowa's banking superintendent closed the Hartford-Carlisle Savings Bank of Carlisle, Iowa, and the FDIC was named receiver.

Hartford-Carlisle, with $113.8 million in assets, is among the three recently failed banks in which fraud played a role, according to regulators.

The others are First National Bank of Keystone, a large bank based in Keystone, W.Va., which grew by paying high interest rates to attract capital from across the country; and BestBank of Boulder, Colo.

The FDIC's estimated $750 million loss caused by Keystone's collapse could put it among the 10 most expensive ever in this country. Federal regulators, who closed the bank in September, said they found evidence of apparent fraud that resulted in the depletion of the bank's capital.

BestBank sold high-interest credit cards as part of a travel-club membership to consumers with damaged credit records. Its failure in July 1998 drained some $232 million from the insurance fund.

Banking Committee Chairman Jim Leach, R-Iowa, prompted by the Keystone and BestBank failures, recently proposed legislation that would give the head of the FDIC more authority over troubled banks.

The bank insurance fund, which backs each account up to $100,000, has an adequate cushion - now some $29 billion - to cover depositors' losses.

AP-ES-02-04-00 1556EST

-- Homer Beanfang (Bats@inbellfry.com), February 04, 2000.

So,whats new?The former incompetent Head of the FDIC,Seidman, is still on the loose,giving financial Advise on the Boob Tube.

-- Flint (no$@this.House), February 05, 2000.

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