Bank Failure Friday Night: The Columbian Bank and Trust Co of Topeka, KS

[Pale Blue Dot]

We interrupt the endless speculation on Obama's VP choice for this minor story about the continuing collapse of the US economy:

The Columbian Bank and Trust Company, Topeka, Kansas, was closed today by the Kansas Bank Commissioner J. Thomas Thull, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Citizens Bank and Trust, Chillicothe, Missouri, to assume the insured deposits of The Columbian Bank and Trust Company.

The nine branches of The Columbian Bank and Trust Company will reopen on Monday as branches of Citizens Bank and Trust. Depositors of the failed bank will automatically become depositors of Citizens Bank and Trust. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage.

Over the weekend, customers of The Columbian Bank and Trust Company Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2008, The Columbian Bank and Trust Company had total assets of $752 million and total deposits of $622 million, of which there were approximately $46 million in uninsured deposits held in approximately 610 accounts that potentially exceeded the insurance limits. This amount is an estimate that is likely to change once the FDIC obtains additional information from these customers.

The Columbian Bank and Trust Company also had approximately $268 million in brokered deposits that are not part of today's transaction. The FDIC will pay the brokers directly for the amount of their insured funds.
http://www.fdic.gov/news/news/press/2008/pr08069.html

We now return you to obsessing about much more important things.

[Theres-a]

1. Lawds yes.

Ain't it somethin'....K & R

[depakid]

2. Brought to you by the Gramm-Leach-Bliley Financial Services Act

supported by none other than Chris Dodd and Joe Biden.

[Pale Blue Dot]

3. Look at all of the happy old white men!

Brings a tear to me eye. No, really - it does.

[depakid]

4. They KNEW they were into the loot

as in, loot the treasury.

[magellan]

8. Seriously -- WTF were they thinking?

Do the Dems who supported that now have anything to say about it besides "We're in the money, we're in the money..."? How about Joltin' Joe? Seems a potential VP pick should have more common sense, or at least be willing to buy the rest of us a conscience chaser.

[depakid]

12. After the Savings & Loan fiasco and the collapse of LTCM

There are few conclusions other than "we're in the money" to explain the votes in a rational manner.

[ColbertWatcher]

5. Another Friday, another bank closing. Good catch. n/t

[KamaAina]

13. Turns out there's a reason for that, besides the "Friday News Dump"

it gives FDIC time to get things in order so the doors can open Monday morning.

http://www.slate.com/id/2196615

Last week, First Priority Bank in Bradenton, Fla., became the eighth American bank to fail this year. Every single one of these institutions went under on a Friday. Why do banks always go bust on Fridays?

So the government has a full weekend to reopen them under new management. If the banking business didn't return to normal at the earliest opportunity, the specter of agitated customers might erode public confidence in the banking system, triggering a wider panic. So regulators close banks at the end of the day on Friday to take advantage of the regularly scheduled days off. In that time, officials from the Federal Deposit Insurance Corp.—the agency in charge of supervising the actual takeover—can settle a failed bank's accounts and carve out assets to liquidate later, thereby easing the transition to a new owner. And if there is no new owner—i.e., if no healthy bank has stepped up to purchase the failed one—then the FDIC can use the weekend to write checks to customers for the total amount of their insured deposits. (The FDIC can also create a temporary bridge bank, as it did last month with IndyMac, to take over the failed bank's operations.)...

On the Friday of a typical takeover, the FDIC arrives on-site with a large team to manage the transition. (When a large bank fails, this might include upward of 100 people.) The team has two main priorities. First, it must figure out which customers' deposits are insured and which are not. This can be a tangle, since customers can sock away money in a variety of accounts to ensure that their deposits fall under FDIC-insured limits. The second priority is getting the bank ready to open under new ownership by Monday. That involves discarding any material with the old bank's name on it—like posters, cashiers' checks, and marquee signs—and putting the new bank's paperwork, advertisements, and employees in place. Specialists from other departments, such as facilities, human resources, IT, public relations, and accounting, round out the FDIC's team. Officials once even hired a hypnotist to help a bank employee remember a vault code.

There. Everything you always wanted to know about bank failures*

*-but were afraid to ask.

[ColbertWatcher]

18. Thank you. n/t

[UpInArms]

19. US bank closures done quietly; eye to a sale

http://www.reuters.com/article/bondsNews/idUSN2247674820080823?sp=true

WASHINGTON, Aug 22 (Reuters) - When a U.S. bank fails it doesn't die alone. Months earlier, Federal Deposit Insurance Corp experts have usually slipped into town to see if they can save the institution or at least find an eager buyer.

Current and former FDIC officials describe a tightly choreographed routine for dealing with a failing bank, even making sure cleaners have the branch offices sparkling once they reopen to wary customers after a federal takeover.

Working stealthily to prevent a self-fulfilling run on the bank by customers, an equally quiet effort takes place to solicit buyers for the deposits, loan portfolios and physical assets in case the bank is beyond saving.

"You go through a sale process not unlike an investment bank would handle for companies in the private sector," said Robert Hartheimer, who headed the FDIC's bank failure division from 1991 to 1995. "You conduct an auction."

The FDIC, keeper of a $53 billion fund that insures up to $100,000 per account and $250,000 per individual retirement account at member banks, is by law focused on protecting depositors at the least cost.

That sometimes means trying to sell some unusual items.

The FDIC once owned a 12 percent stake in the Dallas Cowboys football team. Other assets pledged against loans have ranged from casinos and art works to race horses.

"We don't like to repossess collateral that eats," said Greg Coyle, a 25-year veteran of the FDIC who retired in 2006 but is back to help with rising bank failures precipitated by a weak economy and falling home prices.

...more...

[Wiley50]

6. Was Colombian bank busted by the DEA?

Oops No spelled with an A

[lonestarnot]

7. As the toilet water swirls!

[crimsonblue]

9. how didthis bank fail?

they had a motif capitoland deposits, plus the FDIC is supposed to do 18 monh inspections and audits. How did this happen? (disclosure: I have an acct with this bank, but it's just a small checking acct.)

[Snarkoleptic]

10. Plenty of sh!t has yet to hit the fan.

The end of Q3 (September 30) will be a telling day.
Even after Q3 has passed, we'll have a long way to go before the banks are finished reporting the pain they've been feeling.
If you have $100K+ in a single institution, do yourself a favor and educate yourself.
http://www.fdic.gov/deposit/deposits/index.html
Here's a website that I monitor to determine the quantity of the sh!t that hits the fan.
www.bankimplode.com
I recently discussed these issues with my brother and convinced him to spread his savings out over 3 institutions to remain 100% covered by the FDIC limits.

[DemoTex]

11. Hmmm.. Topeka. Westboro Baptist Church. Fred Phelps.

I wonder ....

[bertman]

14. Thanks for posting this, Finnfan. Is there any way to check on the solvency of one's bank?

I went to "the google" and tried bank solvency ratings and pretty much got nothing I could decipher.

Do I have to pay for this info?

Thanks in advance for any help on this.

[Pale Blue Dot]

15. Go here:

http://www.bankrate.com/brm/safesound/ss_home.asp

You can search by state or name of bank.

[bertman]

17. Very helpful. Thank you.

[1]

16. who wants to bet there will be a "columbian to citizens" transfer fee...

for like $70 on everybody's statement next month...