northville foreclosures
The Lapses In Enforcement Of Regulatory Rules Led To Bank Failures In A Foreclosed Climate Of The Economy
The FDIC regulators have been charged that lapses on their part and of other regulators led to bank failures in these dark days of bank foreclosure and recession. A report specifies direct neglect of Main Street Bank in Michigan (Northville). FDIC shied from making any remarks on a specific bank but admitted that much more could have been done by it for similar banks. Sandra Thompson of FDIC looking after customer protection and supervision said, “There are tings we could have done and acted on more quickly.”
More than the rules it is the enforcement that is the key to the problem. Regulators are expected to locate weak spots and risky lending activities and follow it up with recommendations of specific steps to be taken. This should be reviewed – the regulator should go back to see if things were being done as per recommendations. Either this was not done or opposition came from the management.
This attitude led to the fall of three connected banks – First National Bank of Arizona, First National Bank of Nevada and First Heritage Bank. Combined they had $3.65 billion assets. This was seized on 2008 July by FDIC. The three banks had a common board and some functions.
As far back as 2002, Office of the Comptroller of the Currency (OCC) had pointed out some problems with First National Banks of Arizona and Nevada. (The latter two merge in 2008 June) and said that these were “adversely impacted by the significant concentration in high-risk mortgage products and weak risk management controls.” Despite this noting the banks were given a high rating by OCC – the same as that given in 2001 when there were very few troubles.
The three banks were all under the control of First National Bank Holding Co. The chairperson of the latter was Raymond Lamb. The Inspector General has typified Lamb as someone who is extremely dominant and having a lot of influence. He “emphasized growth and profits over appropriate risk management.” Patrick Lamb, his son was in charge of the mortgage section at the First National banks. The latter held the most risky real estate loans. FDIC noted, “The owner’s son ran the mortgage division as a closed, separate operation and wanted no intervention from anyone.” In 2007 July the regulators took over the banks. Raymond Lamb refused to accept phone calls and his son could not be reached.
About the Author
Adam Sanderson , has been working on foreclosurerepos.com studying the foreclosures market, helping buyers on the finer points of foreclosure homes for sale. Try to visit foreclosurerepos.com and begin your foreclosures by state search.
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