* WASHINGTON (8/27/08)--Banking industry observers say that regulators are taking action on bank failures too late after Columbian Bank and Trust Co. of Kansas failed on Friday (American Banker
Aug. 26). The Federal Reserve Bank of Kansas City and Columbia Financial Corp., Overland Park, Kan., signed an agreement to restrict transactions and raise capital two weeks before the failure. The agreement gave the bank 60 days to raise capital, but the bank was closed by regulators just two weeks later. Enforcement orders should be issued right after an exam, said Nicholas Ketcha, former director at the Federal Deposit Insurance Corp. (FDIC). Ann Graham, Texas Tech University Law School professor, said some banks may not be able to raise enough capital. The FDIC has issued 31 cease-and-desist orders in the first half of this year, compared with a total of 48 for the total year in 2007 ... * WASHINGTON (8/27/08)--Brokered deposits have been linked to Columbian Bank and Trust Co.’s failure. Brokered deposits made up 43% of the bank’s $622 million deposit base (American Banker
Aug. 26). Ralph F. McDonald III, a partner at Jones Day, said regulators should have restricted the brokered deposits. The bank also had troubled real estate loans. About $52 million of construction loans were in nonaccrual status, according to a call report. Data from the Federal Deposit Insurance Corp. showed that $7.5 million of Columbian’s portfolio had been in nonaccrual stats in 2007.... * WASHINGTON (8/27/08)--The number of struggling banks on probation has risen (The Wall Street Journal
Aug. 26). The Federal Reserve and the Office of the Comptroller of the Currency issued more memorandums of understanding for the banks to fix their problems so far this year than they did for all of 2007. The Federal Deposit Insurance Corp. had 90 banks on its “problem list” since March 31. Five banks have failed since July 11 ... * ALEXANDRIA, Va. (8/27/08)--National Credit Union Administration (NCUA) Chairman Michael E. Fryzel (left) met with National Federation of Community Development President/CEO Clifford Rosenthal Tuesday at NCUA’s office in Alexandria, Va.
“The National Federation of Community Development Credit Unions has a longstanding tradition of promoting and enhancing credit union outreach to low and moderate-income communities,” Fryzel said. “I am pleased to begin a dialogue with Mr. Rosenthal as both NCUA and the credit union industry continue to explore ways to assist credit unions on this essential effort, and look forward to ongoing discussions with a broad cross-section of the credit union industry.” (Photo provided by the National Credit Union Administration) ...