Two Big S.&.L’s in California Are Shut Down by Regulators

NYT ^ | Nov 21, 2008 | Staff

[fightinJAG]

WASHINGTON (AP) — Federal regulators shut down two big savings and loans based in Southern California on Friday, saying they fell victim to the acute distress in the housing market in that state.

The two companies were the Downey Savings and Loan Association, based in Newport Beach, and PFF Bank & Trust of Pomona. Their closings brought the number of bank failures this year to 22.

The Federal Deposit Insurance Corporation was appointed receiver of the two thrifts. U.S. Bank, based in Minneapolis, acquired all the deposits of both institutions.

Downey had assets of $12.8 billion and deposits of $9.7 billion as of Sept. 30. PFF had assets of $3.7 billion and $2.4 billion in deposits.

Also Friday, Georgia regulators shut down The Community Bank, a small bank in Loganville, Ga. The F.D.I.C. was made receiver of the bank, which had $681 million in assets and $611.4 million in deposits as of Oct. 17. The F.D.I.C. said all the bank’s deposits and about $84.4 million of its assets will be acquired by Bank of Essex, of Tappahannock, Va. Its four branches will reopen Monday as offices of Bank of Essex.

The Office of Thrift Supervision, the federal regulator for the two California thrifts, said they both suffered mounting losses since last year. Downey’s business focused on nontraditional, high-risk home mortgages such as payment-option and adjustable-rate loans.

[RichardW]

Welcome to the club. My own bank was shut down a few days ago and the assets purchased by a stronger bank. So far little has changed; even the sign on the front of the building. Everyone should just be cool. If it was covered by FDIC, there is no need to rush down and pull out your money.

[autumnraine]

I read a story the other day that said that insurance companies were buying up smaller banks so they could be considered a bank for the bailout.