Can You Bank on It?

2,400 words . . . .World Rights Reserved.

Do you remember the Green Mountain Boys? They were the model of citizen militia who inspired the Minutemen after sending the formidable New Yorkers back home in a hurry. After the Revolution, they played a decisive role in keeping the fledgling federal government in check when they marched on the capitol (then Philadelphia) with loaded muskets over a penny tax on a barrel of whiskey. They would be ashamed of us!

Until now, my journalism has been regional. My activism has been limited to the conservation of the Indian River Lagoon in central Florida. We formed a grassroots movement that influenced state law to ban gill nets (destructive fishing practices). Now, it is time to expand that grassroots influence to include destructive, fishy practices by the federal government.

Millions of Americans have saved for their lifetimes to spend their golden years retired here in Florida. President Bush compliantly emptied the coffers of the treasury, but the economy still flopped. Now, for many, the dream of an idyllic retirement in the sunshine state has become a dismal nightmare of financial instability. The Department of Treasury has been revamping of the banking industry. I wonder if President Obama is aware of how these measures are being carried out. Some of his subordinates are out on a bank robbing spree.

In public perception, banks, in general, have been reckless and irresponsible. Actually, 85% of American banks have not been guilty of bad behavior. The image of honest banks has been tarnished. The FDIC has been leveraging this as they waylay community banks and abscond with cash and assets.

A true story that rivals any paranoia fiction novel involves Colonial Bank, a regional bank in Florida, Georgia, Alabama, Texas and Nevada. Conservative Colonial was one of the most highly rated banks in Florida. Their real troubles started when they applied for TARP funding. Somehow, local papers became interested in Colonial’s doings. Reporting gave the impression that Colonial had been carelessly over aggressive and was teetering on the verge of collapse. There was innuendo of criminal wrong doing.

For several years housing prices blasted off on the “Space Coast”. Some mortgage companies made chancy loans for the sake of commissions. They "bundled" risky mortgages with others and sold them in “secondary markets” up north as “real estate backed securities”.Wisdom dictated more scrutiny. It was like buying the mystery gift bag from the souvenir shop at Gator Land.

One day, “for sale” signs quit coming down. Building projects screeched to a halt. Subcontractors couldn’t collect for work completed. Businesses, once successful, went belly up. Neighborhoods became patch worked with empty houses and overgrown lawns. The only people making good money were bar tenders and "repo" men.

Colonial lent money into almost every type of business. Even though they were smart about it, they lost some serious money. Their “mortgage warehouse” took a hit, along with commercial loans. Meanwhile, business banking, retail mortgage, consumer lending, wealth management, and the investment brokerage were hedging against the tide. Colonial’s problems were economy related and not as severe as propaganda testified. At the time of the initial reporting, Colonial’s 12.88% risk based capital rate was above regulating guidelines of 10% to be considered well capitalized. Colonial had assets and strategic measures in place. They had sustained damage, but they would weather the storm.

TARP was heralded as a boon to loosen up more cash for loans. It also exposed community banks to examination by the FDIC. Application for TARP funding was mandatory. The FDIC stipulated that Colonial must accumulate $300 million in additional capital to secure $540 million in TARP funds. This requirement was arbitrary. The original TARP recipients were merely doled out the cash. There was something fishy going on!

The FDIC’s deadline put Colonial into a flurry. They negotiated with several potential investment partners and entertained every possibility. Wagging tongues in the media made a monster out of a proposal that Taylor, Bean & Whitaker (a vast mortgage company) put on the table. Contrary to reports, Taylor Bean & Whitaker jumped the gun. Their agreement had a stipulation. In the end, Colonial took issue with the way Taylor Bean & Whitaker had been operating. Remember the real estate backed securities? Actually, Taylor Bean & Whitaker is problematic for Bank of America who snatched the grab bag and still got a thick slice of TARP pie.

Colonial blew off the media stink about their “questionable business practices” and forged ahead with plans to survive the tempest. They canvassed employees for new ideas and created appealing investment opportunities. They raised a lot of money in a short time. They were dashing towards their goal in the harsh environment as their bogged down peers were taking note.

Colonial's efforts were futile. Their fate was sealed. With the deadline for raising the cash over a month away, the feds showed their hand. They changed the rules and nixed the deal. They weren’t neighborly, either. Anyone with a question was snubbed, including congressional oversight and finance committees.

Since hitting the news, Colonial’s investment professionals spent their day reassuring clients. The bank had sufficient assets and many investments were outside and untouchable. Award winning professionals plied their trade from a stout licensing platform held by the bank. Their numbers were up in a down market. This piqued industry wide curiosity. They were doing something right. They offered superior products and represented private (not traded on Wall Street) firms, like New York Life, who back some investments with one and a half times of reserve capital. The FDIC can’t muster half.

The weird trouble escalated. The FDIC issued a “cease and desist” order along with a notice of examination. Reports left the impression that investment activity and assets were frozen because of ineptitude or law breaking. This undermined confidence. Stock value dropped. Staff redoubled efforts to calm panicky clients. Here in central Florida, many are retirees depending on lifelong investments for their very survival. Even high ranking Colonial executives were confounded by the needless actions of the FDIC. They concluded that there was nothing to worry about. They had kept their noses clean and knew the bank was set on a firm foundation of over twenty five billion in assets.

It got even weirder when “regulators” from the FDIC showed up, unannounced, with a federal order and hand trucks to cart off the bank’s records from the main branch in Orlando. The police cordoned off the area and stood guard with folded arms while a flock of media circled the event. Colonial employees throughout the state were stunned. When they got home from work that evening, they were flabbergasted to see local news broadcasting that Colonial Bank had been “raided” by the FDIC and FBI. They showed footage of grim, determined men in silkscreened wind breakers carting off boxes of records for an investigation of “possible fraudulent, criminal or inappropriate activities of the troubled bank”. Phones rang off the hook. It was intense.

Colonial was expecting a routine examination, not a raid. They had been preparing in a cordial atmosphere. Everything was ready for a cooperative interaction. They had pastry and fruit set out. The next day, Colonial officials confronted the news stations with the truth and requested a retraction. The stations curtly refused. They were simply reporting the news as it was released by the wire services. They weren’t liable. There was something fishy going on!

Colonial's records were in order. There was no validated evidence of fraudulent or criminal activity. Still, reports left an indelible impression that the bank was in dire straits ethically and financially. Colonial staff became profoundly frustrated by the twisted reports and their inability to counter them.

It was banking blitzkrieg! Sufficient time had not passed to thoroughly examine records or investigate allegations, yet, the media announced how Colonial had “collapsed” and was to be consolidated with Branch Bank & Trust. TARP recipient BB&T has aspirations of becoming the country's largest bank. Much to their advantage, they have a special relationship with the FDIC.

Executive officer Kelly King released this statement in the Wall Street Journal, “Today’s announcement represents an exciting growth opportunity for BB&T. We’re gaining solid market shares in great markets in Alabama, Florida and Georgia. And, it comes at minimal asset risk to BB&T because of our loss agreement with the FDIC.” Is he so elated from the successful heist that he can’t help bragging? Where is Colonial's loss agreement?

Colonial didn’t collapse due to troubled assets, but by mandate from the FDIC. I quote, “The announcement follows a decision by Alabama regulators to close Colonial and name the FDIC as receiver.”

Translation, “The announcement follows a preordained decision by henchmen in Alabama to close Colonial Bank for the sole purpose of naming the FDIC as receiver.”

Who regulates the regulators? This bank should not have failed and would not have failed without intervention from the FDIC. Colonial was a plump plum for the picking. This is a text book example of federal confiscation and redistribution of private assets.

The actions of the FDIC make a hostile corporate take-over look like a surprise birthday party. On Friday afternoon, Colonial’s employees were notified of the “forced sale” of their beloved, close knit organization. Saturday morning they worked for BB&T. The bank had been lynched without a trial. Benefits were frozen. Colonial stock was now extant and there would be no remuneration. They all thought the stock would hold its own. When a corporate raider is done with the dirty deed, at least the stock still has value.

Again, from the Wall Street Journal, “More than 425 BB&T employees will work side by side with Colonial employees and their clients during the transition . . . we’ll offer Colonial clients the BB&T community bank feel with the familiar faces they are used to doing business with.”

Again I translate, “More than 425 BB&T employees will be holding a knife to the back of Colonial employees during the transition . . . BB&T is going to keep some trusted, familiar faces around to keep clients from freaking out about the fact that Colonial has been hijacked by the FDIC.” Not only did these pirates commandeer the ship . . . they shanghaied the crew!

They didn't keep the whole crew though. Numerous positions were systematically eliminated. Traumatized employees became extremely insecure. They were afraid to rock the boat, and be forced to walk the plank. What fate would befall them in the tattered job market? They held their tongues as salaries were cut and commissions from the previous quarter were not paid. They were subjected to a surreal reorientation program that compelled compliance to a mind numbing corporate culture. Complimentary coffee, snack trays, and ambient music were removed. What about the promise to create jobs and do what’s best for the American people?

In the media and on the internet, Colonial was represented as a culprit. It was BB&T to the rescue. Check out the spin on this disclaimer from BB&T about the selection process of their new acquisitions, “. . . also excluded are assets and liabilities the FDIC determines are related to fraudulent or criminal activities.”

The FDIC never identified any fraudulent or criminal activities. They have not adequately explained why they “had to” close Colonial. Why was BB&T the only bank with a shot at Colonial when there were several others with a keen interest?

Colonial’s stellar investment brokerage became a conundrum for BB&T. BB&T’s exclusively “in house” products are no match for Colonial’s smorgasbord of investment opportunities. They aren’t as sophisticated or diversified and are distinctively different in form and philosophy. Colonial truly put their customer's best interest first.

Colonial's investment brokers were on a mission. They customized for the individual and made it more difficult for the tax man to siphon off the fortunes of their clients. Investments offered by Colonial were extremely popular with older Floridians who found them to be safe, lucrative and better sheltered than most. Many older clients were desperately seeking reverse mortgages when Colonial’s “familiar faces” steered them to far more agreeable positions for their remaining years. The brokerage staff has not been eager to limit their clients to BB&T products.

Licensing regulations preserved the Colonial Brokerage for a while. The brokerage remained intact during the shake down. BB&T seemed a bit dizzied by the thing. They were dazzled by the booty in this treasure chest, but they couldn't hoist it. There was no contingency plan. BB&T didn't have the licensing platform or expertise to act immediately. They were like bear cubs around their first honey tree. They could smell the sweet goodies, but they didn't want to get stung.

Eventually BB&T figured it out. They would cut the brokerage into little pieces that were easier to haul off. They sent terse letters of notification to investors who were given thirty days to responded before BB&T would assume control. Many balked at the hard-boiled communication and transferred elsewhere immediately. A few hundred of the most qualified professionals were handed their walking papers.

When the time passed, customers started trickling into the offices of the few remaining "familiar faces" to find out what was going on with their money. One well to do old time "Florida Cracker" cattleman (who didn't like to be told what to do) sought out his favorite financial counselor. He told his friend (who was being shuffled from one branch to another) “I had a heck of a time finding you. They don't want me to talk to you."

He had been instructed to call the new customer service number with his inquiries. He related the experience, “When I called the number, the operator was in India! They were no help at all."

The information technology support, once provided in-house, was also moved to India.Colonial personnel miss helpful visits by well versed techs. They resent BB&T's less evolved system and the condescending attitude of the less competent Indian replacements who exercise free reign to access everything in their computers.

Did I mention blitzkrieg banking? Take note, “BB&T was advised in the transaction by Duetsche Bank Securities Inc., Credit Suiss Securities LLC, and Watchell, Lipton, Rosen and Katz.” Didn’t I see this list in a John Birch Society pamphlet or Hal Lindsay report? Why are foreign entities involved? I suppose they are buzzards who have caught a whiff from the carcasses of American banks. Perhaps they are old associates of Federal Reserve Bank President, Timothy Franz Geithner, who are pitching in to help him orchestrate his misguided vision of the global economy.

Here is an interesting point to bring up now. Colonial Bank refused to lend or invest outside of the American domestic market at all. There is something fishy is going on! This is no isolated incident. Without a twinge, Kelly King boasted, “BB&T participated in a previous FDIC aided transaction in December when it paid $112,000 to assume $515 million in deposits from former Haven Trust Bank of Duluth, Ga. It also received $55 million in assets consisting primarily of cash and marketable securities in the deal.”

That’s one hell of a deal! No wonder Secretary Geithner has been touting the strength of favored TARP recipients and bragging about how quickly they have paid back the money. It is not by merit or an improving economy. It is by raiding and pillaging “troubled” community banks. BB&T is in cahoots with the FDIC, who themselves are on the brink of failure. No wonder Secretary Geithner has been vague about details and particulars during questioning . . . the methodology is demonic. The FDIC is in the process of expropriating wealth to centralize the banking industry under the "Fed". Will we need to have 666 on our hands to access our accounts?

An indication that this affair is not right is the speed involved. There is a lack of detail. Exactly how did the relatively well capitalized Colonial become a “failed institution”? A clear, definitive explanation would be refreshing. There have been implied allegations of wrong doing, but no specific charges or hearings. Colonial had integrity. Due to that, they were able to successively raise a fortune in capital to meet the FDIC requirements. That cash was divvied out to BB&T along with the $25 billion in assets.

In light of the circumstances in our country, I don’t understand why the FDIC would not give Colonial Bank the break that was dangled in front of their nose. Why not deliver the promised funding to stimulate local business in the region by leaving the popular institution intact?

Colonial shareholders got stiffed. In a legal merger they would have been compensated. One group of shareholders is reportedly going after retired bank founder Bobby Lowder with a class action lawsuit. This seems odd since Mr. Lowder kept all of his eight million shares in good faith that Colonial was worthy enough to stand through the gale. Who should he sue?

It was not fair to Colonial employees who were “transitioned” without any real notice. It was akin to the way Andrew Jackson transitioned the Cherokees to Oklahoma.

It was not fair to the customers. It has been demoralizing for many senior citizens who made it part of their routine to visit the bank, have refreshments, and chat with their banker while checking on their investments. It has been confusing for them. Kelly King’s “community bank feel” can’t compete.

If there is transparency, why is it so hard to see into this issue? How is playing “Pac-Man” with regional banks beneficial to the economy? Why is it necessary to “raid” cooperative institutions? The best interest of Americans has not been served by the FDIC. Their public behavior and personal treatment of Colonial employees has been overtly unfriendly and totalitarian. How long before “regulators” start showing up in quasi-military uniforms sporting black arm bands emblazoned with “FDIC”?

Where are the Green Mountain Boys now? They would tar and feather these public privateers and ride them out of town on a rail. The FDIC has commandeered over four hundred “troubled” banks this year. More of them “fail” daily. Watch out! Your bank is next!