rss feedA peek behind a regional bank failure
I should start by saying that the behind-the-scenes video from CBS News that you see above is from a bank failure in 2009 – and occurred outside Washington state.
But if you live in the Seattle area and didn’t see the news Friday night, Evergreen Bank has failed and Washington state regulators have closed its seven branches.
Not enough capital and bad loans were cited as the reasons, The Seattle Times reported. Umpqua Bank, based in Oregon, will begin operating the branches.
Earlier this year, another regional financial institution, Horizon Bank, also was deemed a failure. Regulators closed it.
Drew DeSilver, a Times reporter also covered that closure, and wrote late last year that four other state banks are under closer federal oversight.
What does this mean?
Well, the federal government does protect the money of depositors. The Times ran a Q&A piece about what happens if your bank fails.
But when a company fails, it is a moment to pause.
Washington Mutual, also known as WaMu, was the biggest Seattle-based financial institution to fail in recent years.
My former employer, the Seattle Post-Intelligencer, stopped printing a newspaper in March. MediaNews, which owns newspapers in the United States, has filed for bankruptcy protection.
As I thought about the Evergreen closing – and I passed a branch on Thursday - I recalled watching this 60 Minutes piece last year.
I found it online and thought I’d post it here. It gives you a good sense of not only history in the making but what actually happens when the action goes down.
Many times, customers hear about it through media outlets. Journalists often hear about it after regulators have taken action.
In this case, cameras were rolling as the action occurred.
I know it’s not the most upbeat topic for a blog entry – especially since I like tofu.
In October, I attended a meeting about the state’s economy and labor picture outlook.
Arun Raha, the chief economist for the state of Washington’s Economic and Revenue Forecast Council, said he was keeping an eye on the health of regional banks.
This is what I wrote in October after the meeting:
He said he is watching the health of regional banks in the state and whether a second round of credit contraction occurs. These banks entered into commercial loans, sometimes in construction, and might be ‘vulnerable,’ especially since it is difficult to compete with larger financial institutions that are in the same market.
It’s obvious but worth saying: Let’s hope there’s more growth in the U.S. economy.
