| Weekly Columns Five More Banks Failed on Friday
by Jake Bernstein,
ProPublica www.propublica.org
Community Bank of West Georgia,
based in Villa Rica. It was founded in 2003 to
take advantage of the red hot real estate market
in Atlanta’s suburbs. As of the first
quarter of 2009, about one-third of the
bank’s $129 million in total loans were in
some stage of delinquency, default or had become
bank-owned foreclosures, according to the Atlanta
Business Chronicle.
Usually when a bank fails, the
FDIC finds a neighboring institution to help
defray the cost of the failure in exchange for
assets and deposits in what’s called a
"purchase and assumption agreement."
Customers of the failed bank continue with the
new bank as if nothing had happened. The FDIC
could find no takers for Community Bank of West
Georgia. It will instead mail checks to insured
depositors for their funds.
Next to fail was Neighborhood
Community Bank of Newnan, Ga. In this case, the
FDIC struck a purchase and assumption agreement
with CharterBank of West Point, Ga.
Since the FDIC likes to close
banks after business hours, it announces failures
from east to west, usually beginning around 5
p.m. Eastern Standard Time. Almost two hours
after the agency revealed the first Georgia
failure, it moved west to Minnesota where Horizon
Bank of Pine City officially failed. The
bank’s assets and deposits were picked up by
Stearn’s Bank of St. Cloud.
As in Georgia, bad real estate
lending seems to be the culprit.
The Star Tribune had the quote
of the day:
"There’s a lot of
toxic assets," said Norm Skalicky, CEO and
major owner of Stearns Bank, who was in Pine City
on Friday. "Everybody was on kind of a
spending spree. That has to get flushed out, I
guess."
From Minnesota, the financial
grim reaper swung over to California, where
reckless real estate lending has led to multiple
bank failures in the past two years. The FDIC
announced the failure of Irvine-based
MetroPacific Bank. Sunwest Bank of Tustin,
Calif., picked up its non-brokered deposits. To
cap the day off, shortly before 10 p.m. EST, the
FDIC issued a press release on the closing of
Mirae Bank, located in Los Angeles’
Koreatown district. The press release offered
Korean and Chinese translations. Wilshire State
Bank of Los Angeles assumed all the non-brokered
deposits.
The Los Angeles Times reports
that the FDIC has hired about 400 people to staff
an office in Irvine to supervise bank closures in
the region. As of late May, the FDIC’s list
of problem banks nationwide numbered 305.
How Fast Can
Greenbacks Go Green?
By Amanda
Michel and David Epstein, ProPublica www.propublica.org
Last week the administration
released guidelines for counting jobs created by
the stimulus. The guidelines, like the
administration’s early estimates for
stimulus job-creation, have stirred up some
debate. Now we’re seeing the guidelines put
into practice, and officials in Texas estimate
that more jobs are being saved than created,
according to an article in today’s Fort
Worth Star-Telegram.
The Obama administration
peppered the stimulus package with provisions
emphasizing the need to use federal funds for
projects that will reduce greenhouse gas
emissions. So states have begun to ramp up
energy-saving efforts, from weatherizing homes
and installing wind-energy systems in schools to
installing solar hot water heaters in fire
stations and using energy-efficient LED bulbs in
streetlights. The stimulus also promoted the
purchase of plug-in, electric cars. But a recent
GAO report found that because the electricity for
electric cars is generated by coal-burning
plants, it might just be a case of trading one
greenhouse-gas emitter for another. "For
plug-ins to reach their full potential," the
report says, "electricity would need to be
generated from lower-emission fuels such as
nuclear and renewable energy rather than the
fossil fuels—coal and natural gas—used
most often to generate electricity today."
The Seattle Times reports that
stimulus-funded jobs have been offered to almost
300 youths in four northwestern Washington
counties, including six who now work at a
fish-hatchery.
As has been reported before,
many states are dusting off plans for road and
bridge reconstruction efforts and using stimulus
money to fund them. In Kansas, for instance, the
Department of Transportation is "allowing
the state to complete all the projects it
outlined 10 years ago under its comprehensive
program," reports the AP. States have until
June 30 to decide how to spend half of their
highway funds. Projects that have already been
designed have, according to reports, largely been
favored over new ones.
Roughly $500,000 of the $2.5
billion in stimulus funds for free and low-cost
health clinics is making its way through the
system. Today, Capitol Hill Blue documents some
of the ways that clinics are using the funds,
from routine dental check-ups for homeless youth
in Colorado to opening up doors to more patients
in Pennsylvania.
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