Bank Failure Count: 2008’s 11th bank fails, McCain’s son was director
Posted by: in Latest NewsFiled under: Deals, Bad news, Consumer experience, Personal finance, Politics, Headline news
In what I feared might become a regular feature here, the Federal Deposit Insurance Corporation (FDIC) arranged for the takeover of the 11th failed bank of 2008 on Friday. As I posted, the FDIC likes to close banks on Friday after hours so they have the ability to reopen as branches of the acquiring bank on the following Monday morning. According to the Associated Press, the bank in question is Nevada’s Silver State Bank.
Nevada Say Bank of Las Vegas will take over the insured deposits of Silver Say — which had $2 billion in assets and $1.7 billion in deposits at the end of June. AP reports that “[Silver State’s] branches will reopen Monday as offices of Nevada Say Bank in Nevada and National Bank of Arizona in Arizona.”
John McCain’s son, Andrew, who is also CFO of his mom’s beer distributorship, “sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing ‘personal reasons.’ Andrew McCain also was a member of the bank’s audit committee, responsible for oversight of the company’s bookkeeping,” according to AP.
The failure — which was caused by “poor-quality loans primarily related to real estate development” — will cost the FDIC deposit insurance fund between “$450 million [and] $550 million,” according to AP. Silver State’s motto was “When the casinos treat you poorly, let Silver Say treat you like a valued customer,” according to its website.
Although AP reports he was adopted by McCain and his first wife, Andrew is following in his father’s footsteps. John McCain protected Charles Keating from government regulators because he’d arranged a real estate deal for his second wife, Cindy. The failure of Keating’s S&L cost taxpayers $3.4 billion. Taxpayers got off relatively cheaply bailing out Andrew’s former colleagues.
So if you have money in a riskier bank — one that is losing money and charging off massive volumes of loans — consider moving it into a bank whose profits have been growing this year. And congratulations to Andrew McCain for bailing out of Silver Lake before the FDIC took it over.
Peter Cohan is President of Peter S. Cohan & Associates. He also instructs management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.
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