FDIC takes 2 more banks and closes 28 branches
On Friday, July 25 2008 28 branches of the 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California, were closed by federal regulators. The FDIC said the takeover of the failed banks was the least costly resolution and all depositors will switch to Mutual of Omaha with “the full amount of their deposits.” As of June 30th, the banks closed by the FDIC had total assets of $3.6 billion. Most of the assets are in 1st National while First Heritage accounts for $254 million. In Nevada, 1st National has 10 branches and employs about 350 people. Bill Uffelman of the Nevada Bankers Association said Friday the FDIC action “is a reflection of the times for the banks. It’s a poor economy.” Uffelman cautioned against the sort of consumer concern that prompted customers to wait in line for hours to withdraw funds after IndyMac Bank branches were seized by federal regulators. All FDIC-insured bank deposits are guaranteed by the FDIC up to $100,000, Uffelman noted. So all the customers of the bank that have up to $100,000 are safe, but those that have more than $100,000 may have some trouble taking hold of their cash.
3 comments:
What is the argument for providing federal insurance of deposits? Why not simply let the banks go bankrupt? What's wrong with the argument that if customers put their money in banks with risky management practices, then the customers (and the bank's shareholders) should bear the brunt of their careless behavior.
This is a scary thought of the times we live in today. Reading something like this makes you think about the Great Depression, and if it could happen again. However, it is good that they accounts were insured by the government, and those with 100,000 dollars or less will have total fund returned to them.
Good for people to know.
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