Regular readers may recall that one of my SRI investments is a deposit with ShoreBank. Prudently kept below the FDIC limit, that deposit is now on a ride to a new bank, Urban Partnership Bank. As an electronic banking customer, it was fairly easy for the FDIC to just email me directly. How efficient.
Important Message from the FDIC – ShoreBank – August 20, 2010
On Friday, August 20, 2010, ShoreBank, Chicago, Illinois was closed by the Illinois Department of Financial and Professional Regulation, Division of Banking. The Federal Deposit Insurance Corporation (FDIC), as receiver, arranged for the Urban Partnership Bank, a newly chartered bank, to assume the banking operations of ShoreBank, including all of the deposits. There is no immediate impact for deposit customers. Depositors can continue to access their accounts as they normally would, including writing checks or using ATM or Debit cards.
There is no need for customers to come to the bank. All of the information customers should need is included in the referenced Question and Answer Guide <http://www.fdic.gov/bank/individual/failed/shorebank_q_and_a.html> . The FDIC encourages customers to read the Guide and contact the FDIC Call Center at 1-800-523-8503 with additional questions.
Bank activity will be business as usual. Deposit accounts remain insured up to $250,000. The FDIC encourages bank customers to use all traditional methods to conduct bank business.
Please be advised that you will not receive notification from the FDIC, the Receiver, or ShoreBank to claim/unlock/unsuspend your account or to provide any private information. Be wary of scams to obtain information by individuals or entities indicating they are acting on behalf of the FDIC or ShoreBank.
The new bank seems to have been formed primarily by the very investment group that was trying to invest in Shorebank to boost its assets. I honestly have not followed the details of why Shorebank in particular was in trouble, given the number of bank failures it’s hard for me to single them out as particularly poorly managed or signifying something strongly unusual. However their salvage plan included $75 million in TARP funds which became politicized and withheld.
The irony of this is that the seizure and transfer will cost the FDIC an estimated 367.7 million, as the new bank gets to purchase the old deposits at .50 on the dollar. Ah politics. The next question is… how does this impact our local affiliate, ShoreBank Pacific? I found an interesting tidbit here:
ShoreBank Pacific, the separately chartered bank unit based in Washington state focused on lending to “green” businesses, won’t be included in the new operation. Its CEO, David Williams, said last spring that he was in talks with outside investors in the event that ShoreBank failed.
Unclear for now is what will happen to ShoreBank’s non-profit units and for-profit microlending operation in poor foreign countries. They aren’t expected to be part of the new unit.
I think I’ll check their website tomorrow.