Largest Thrift Failure Since S&L Crisis
Sunday, 30 September 2007 by Jacob TomawNetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an unsustainable level of mortgage defaults.It was the largest thrift to fail since the end of the savings and loan crisis more than 14 years ago. Federal regulators appointed the Federal Deposit Insurance Corporation as a receiver for NetBank, which is based in Alpharetta, Ga.
It looks like NetBank has not been doing well as a corporation for a while. Here is a time line of the company.
ING Direct is taking over the accounts and customers will be able to conduct business online later today.
Normally, this might just be an interesting story but not really something reported on TFL. True, but imagine my surprise this morning when I went to my bank’s site and saw this,
On September 28, 2007, NetBank, Alpharetta, GA was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. All insured depositors are now customers of ING Direct Bank, member FDIC. No advance notice is given to the public when a financial institution is closed.
The FDIC has assembled useful information regarding your relationship with this institution. Besides a checking account, you may have Certificates of Deposit, a business checking account, a Social Security direct deposit, and other relationships with the institution. The FDIC has compiled information which should answer many of your questions.
Today, I am an ING Direct customer! Time to add a news feed of ING to Reader so I am not caught unawares again.
October 3rd, 2007 at 15:35
“No advance notice is given to the public when a financial institution is closed.”
Is this to prevent a run on the bank? Interesting…
How are you liking ING Direct?
October 3rd, 2007 at 20:23
Lack of notification might be to prevent runs, but the insurance itself is the primary defense against that. I think it is mostly because when the OTS finds a bank to be insolvent it revokes the banks charter and gives the FDIC authority to sell immediately. (As a bank employee you would have more incite than I)
I have been pleased with ING so far, because other than not being able to open a new NetBank account nothing has changed for me. The real test will come in 60 days when the accounts are converted.