FDIC Watched as ‘Hot Money’ Boomed at Defunct New Frontier Bank

Discussion in 'Wall St. News' started by ASusilovic, Sep 23, 2009.

  1. Sept. 23 (Bloomberg) -- New Frontier Bank, the largest lender in northern Colorado, had a lot to be proud of in early 2007. Assets had grown by 66 percent the previous year and profits by 53 percent. American Banker rated the bank the ninth- most efficient in the country.

    Regulators knew the reality was different. In mid-2007, the Federal Deposit Insurance Corp., citing weak management, a rise in soured loans and an increased reliance on volatile funding, told executives to slow growth and add capital, according to board minutes of the privately held bank obtained under the Freedom of Information Act.

    While Greeley, Colorado-based New Frontier’s loan losses rose, it took almost two years for state and federal regulators to shut the bank -- a delay that may have made the closing more costly. On April 10, the lender, whose assets had grown to $2 billion under Chief Executive Officer Larry Seastrom, became the 10th-most expensive failure of 2009, costing the FDIC $670 million. No other bank could be found to take over, and the FDIC had to charter a new one to assume the liabilities.

    “The examiners should have seen a lot of this coming,” said Gerard Cassidy, an analyst with Portland, Maine-based RBC Capital Markets, an investment bank owned by Royal Bank of Canada. “I shake my head when I look at some of these failures and ask, ‘Where were the regulators?’ We’re paying a lot more than we would if they had acted sooner.”


    Can the American taxpayer sue FDIC for gross negligence...??

  2. And just where do you think the money is going to come from to pay that American taxpayer? Oh thats right...the American taxpayer! lol

    Its like slipping in your own home and then suing yourself to pay your medical bills.
  3. Oh, I hope every taxpayers bank deposits are FDIC "insured" and "guaranteed". LOL ! Are you really "believing" it is "insured" and "guranteed" ? LOL !
  4. Sure it is! Just ask AIG.:D
  5. zdreg


    It is. repayment will be in worthless or near worthless $US.