A few select quotes:
"'We’re going to outnumber them, and it’s almost going to be like a herd of locusts descending on the place where they work.'" -Ann Hill, FDIC
"This was no ordinary bank heist. The intruders were from the government and they were here to close down the failing bank and replace it with a profitable one in the course of a single night."
"[Sadie Kelly] expressed concern for the bank employees, but not the management or owners, who will lose their jobs and shares in the company. 'It seems like the big guys with the big bucks are the ones holding the reins. To be honest I’m quite happy to see them crumble.'" -Sadie Kelly, Habersham Bank customer
"[L]ike much of America, Cornelia is getting used to having its banks closed on a Friday night."
"[Kevin] Hagler was a bank examiner, patrolling the Georgia countryside trying in vain to exert some regulatory control. It was tough to put the brakes on, he says, when a banker wanted to lend to a property developer who, in turn, had five builders fighting to work on his project. 'I say, ‘that’s a bit risky’ and they say ‘get the hell out of here – you’re taking food out of my baby’s mouth!'" -Kevin Hagler, FDIC
"'Georgia is over-banked.'" -Kevin Hagler, FDIC
"[Robert Hill's] energetic team was already going through the Habersham books on Saturday morning, poring through lists of old customers. Things have been so bad that there hasn’t been any proper lending for three years. 'One that we called on said he’d always banked at Habersham but hadn’t been able to do business there,' says Hill. He extended the businessman a $1m equipment loan there on the spot." -Robert Hill, South Carolina Bank & Trust
"When I asked Eric Raines of the FDIC whether he could see a big bank closed in the same way, he smiled: 'You mean like a Chase or Bank of America? ... It gets political.' -Eric Raines, FDIC
"[FDIC Chairman Shelia] Bair, though, is determined to keep the politicians out of the picture and ensure that her legacy will be ending the dreaded 'too big to fail' phenomenon."
FDIC Exposer may be reading these wrong, but these statements seem a bit biased against community banks. The FDIC wants us to believe that bank management, the "fat cats" as customer Ms. Kelly calls them, are mavericks out to make a quick buck, and the examiners have no real power to rein them in.
Just how helpless are these examiners? The FDIC wants us to believe that their only power lies in their magical formulas to determine whether a bank is insolvent. In reality, the only hard and fast number is the 2% capital to asset ratio that Congress arbitrarily chose to define insolvency. How you reach that number, however, is open to interpretation. The FDIC determines how much loans must be written down, and they provide no explanation for how they reach a particular value. So many of the other factors they look at are incredibly subjective - how do you measure management on a 1 to 5 scale?
Without hard numbers to back up their findings, any biases - for or against - will play a huge role in whether a bank makes the cut. If an examiner simply doesn't like a particular individual at a community bank, he can be as vengeful or intimidating as he wants.
Are those really the rules we want our community banks to live and die by?
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