While we’re on the subject of failed banks, our Whiteboard guru Paddy Hirsch just found out his small bank has been seized. Not that anyone at the bank seemed to know this.
Paddy tried to get some answers on the phone, but it was tough sledding:
The FDIC says no advance warning about the FirstFed/OneWest deal was given to the public. Nor to the media relations arms of either bank, apparently. The FirstFed people told me they have no idea what happened, or why they were sold, and they were shocked to hear the FDIC was referring to their former employer as a “failed bank.”
But indeed, First Federal was one of 7 banks taken over by the FDIC on Friday. Besides the stone wall he ran into, Paddy wasn’t very happy that his new bank, OneWest, is actually IndyMac. OneWest was formed out of the ashes of IndyMac by a group of private equity and hedge fund investors that included George Soros. More from Paddy:
… one of the reasons I loved FirstFed was that whenever I called them, I got a human on the phone, straight away. OneWest, however, is one of those banks that appears to believe it can best serve its customers by plunging them into voicemail hell. Not just endless recorded messages giving you options you don’t want, and misdirections to irrelevant menus, but hold music of the worst kind. Not only cheesy, but overmodulated, and LOUD.
It’s almost like they don’t want you to be on the phone…
But don’t feel too bad, Paddy. The small banks themselves feel snubbed. Today, President Obama met with the heads of several community banks in what appeared to be a make-up session for not inviting them to the White House with the big bankers last week.
Or perhaps it was because small banks and big banks can’t be in the same room together anymore. From the Wall Street Journal:
Two bankers’ groups, the American Bankers Association and the Independent Community Bankers of America, are challenging each other, and their competing messages on Capitol Hill have made it easier for Democrats to ignore some of their arguments, lobbyists and Capitol Hill aides said.
Both trade groups claim to speak for “community banks.” But they took starkly different positions on a recent House bill to overhaul financial regulation: the ICBA supported it, while the ABA opposed it. This led to a war of words, which promises to become nastier as the Senate takes up the bill.
Despite TBTF and the bailouts, House Financial Services Chairman Barney Frank would have us believe that Congress has a thing for small banks:
“It’s not the big banks that have the clout,” he said. “It’s the community banks and the credit unions.”
It’s true, members of Congress have to go home and answer to their “constitchency” of community banks. But I don’t know if I’m buying that one. Unless, it’s the hold music that’s swinging votes…
More from Paddy tonight on Marketplace.
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