TEXT OF STORY
Tess Vigeland: One-hundred-twenty-four banks have failed so far this year. Nearly every week the Federal Deposit Insurance Corporation announces another round of closures. The most recent was Commerce Bank of Southwest Florida, which the FDIC sold to a bank in Minnesota.
Sometimes changes in ownership can be pretty painless for bank customers. One day you bank with Washington Mutual, the next day it’s Chase. But as Chicago Public Radio’s Adriene Hill reports, there are times when a bank’s closing prompts an entire community to take action.
ADRIENE HILL: Bankers don’t have a lot of friends these days. We’ve heard stories of corruption and greed, tales of poor judgment and big bonuses.
But this is a different sort of story — about a community bank with a long history of lending to poorer neighborhoods in and around Chicago’s south and west sides.
Park National Bank was shuttered at the end of October, along with eight sister banks across the country, all owned by the same holding company.
Under a deal with federal regulators, the banks were immediately acquired by U.S. Bankcorp. They reopened the next day as U.S. Bank branches.
Despite that, protesters have taken to the streets.
CHANTING: Park National Bank, too good to fail! Park National Bank, too good to fail!
Why all the love for a bank?
DAVID POPE: The commitment they’ve made to supporting neighborhoods and the people in particularly undeserved is striking, it’s an incredible example for all of us.
That’s David Pope, he heads the elected council for Oak Park, a Chicago suburb.
Pope says Park National did things like give free space to a local Head Start preschool, give money to social service groups and lend money to schools
One of those schools is Chicago Jesuit Academy, a private middle school on the west side of Chicago, where every student is on scholarship.
When I’m there, late in the afternoon, it’s extra curricular time: new musicians are learning to play B-flat.
Matthew Lynch is president of the school.
MATTHEW LYNCH: It would not be an overstatement to say that Chicago Jesuit Academy would not exist without the generosity of Park National Bank.
A few years ago Park National gave the school a $4.2 million, zero-interest loan to buy and renovate its building.
LYNCH: We were a new school on the West Side of Chicago with no credit history, but the bank saw in us great promise and great potential.
Park National also gave the school a million-dollar gift of which the school has received a little less than half.
Now, with the bank’s closure, the future of that gift, and what comes next for all of the groups supported by Park National, is up to U.S. Bankcorp, which took over Park National’s assets.
Lisa Glover is the director of community affairs for U.S. Bank.
LISA GLOVER: What we’re trying to do is get out and just talk to everybody who had a relationship with Park National. Obviously they had an enviable record of community service and involvement, and we’re trying to understand that.
Glover says U.S. Bank hopes to make decisions about its own investments by early next year.
In the meantime, bank supporters have created a group they’re calling the Coalition to Save Community Banking and asking a congressional panel to look at how and why Park National was closed.
Especially galling to protesters is that Park National was relatively healthy when it was seized.
Regulators shut it down using something called cross-guarantee liability. Basically some of Park National’s sister banks — other banks owned by the same holding company — were under-capitalized and the government decided it had to take down the good banks with the bad.
In Chicago, I’m Adriene Hill for Marketplace.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.