From the FDIC press release:

"First National Bank of Nevada, Reno, Nevada, and First Heritage Bank, N.A., Newport Beach, California were closed today by the Office of the Comptroller of the Currency and the FDIC was named receiver."

For depositors of these banks, the good news is that you won't lose any money even if you had deposits over the FDIC limits:

"All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Mutual of Omaha Bank for the full amount of their deposits."

This is nice for depositors with uninsured deposits, but why did the FDIC do this when the closure is going to cost the Deposit Insurance Fund $862 million? From the press release, "The cost of the transactions to the Deposit Insurance Fund is estimated to be $862 million."

 

Submitted: Jul 26, 2008    Views: 358    Comments: 1    Likes: 1   


View Article: http://www.fdic.gov/news/news/press/2008/pr08063.html


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Comments Received:

Ben
(Unregistered)

The FDIC is creating an even bigger moral hazard issue if it bails out everyone with over 100K.

Posted: Jul 26, 2008



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