“For many Americans, the financial health of New Jersey’s banks and other financial institutions is at stake today, as the Federal Deposit Insurance Corp. was forced to shut down eight of its regional offices here.
The FDIC has been struggling to provide adequate protection against the financial risks posed by the collapse of the region’s banks. But this week the agency has announced that it may be forced to shut down more of its regional offices.
The FDIC’s regional offices are like a sort of private club for Wall Street. They collect and distribute the $100 million that is the federal agency’s “reserve” for money-losing banks, which is kept in banks’ vaults for a year and half. In other words, the government is giving banks access to a bunch of cash they can use to pay off their debts.
In the end, this means that the banks in the FDICs regions will be more likely to fail. This is a problem because for every bank that goes belly up, the FDIC (which is the federal government’s banking regulator) gets to make money from the failed bank before taxpayers do. If a bank is still in business though, the FDIC has to pay it back.
The problem is that banks are just like any other company. They are run by people who just happen to have bank-friendly positions. This is a problem because if you have some really bad people running the bank, you can always bet that the worst bank is going to fail just because they are so incompetent. This is why some of the best banks in the world are based in countries with less than perfect government systems.
In the case of the Bank of New Jersey, we already knew that. We know that the FDIC has to pay the bank back because that’s their job. However, no one seems to care about the fact that the bank’s owners and employees are so incompetent that they actually have to pay back the FDIC. That is all the more reason to question whether the bank is really going to make it.
For the current issue of the New Jersey Com-com’s ‘News and Herald Ledger’ we are looking at “The New Jersey Bankers’ Insolvency.” The issue, as the title suggests is an attempt to get the bank to return money owed the New Jersey FDIC. For the past several weeks, the bank has been on the verge of insolvency, and has been on the verge of being declared in-soli…
The FDIC is a federal agency that regulates banks. The FDIC is currently in the process of filing a formal insolvency proceeding against the bank, in order to get the bank back into the FDIC’s care. What that means is that the FDIC is going to have to give the bank a “going concern” letter.
The FDIC has been trying to convince the bank’s board of directors to hand over control of the bank to a new entity. The FDIC would then be in a position to get the bank back into the hands of its original owners. As it stands now, the bank is in a position to be declared in-southern-California-soli…
The current status is that the FDIC (and the banks board) are saying that the bank is insolvent, and that the board has to step in and take control. But this is only part of the story. The other part is that this is just the first step in a long process that will get the bank insolvent and back in the hands of its original owners.