FDIC shuts down AmTrust Bank and 5 others to bring total to 130 in 2009

December 7, 2009 by · Leave a Comment
Filed under: Bank Failure 

Having AmTrust fail is pretty major being they had $12 billion in asset when the FDIC put them into receivership.   According to the AP release, AmTrust losses were connected to exposure to loans connected to land deals and construction developments.  FDIC has been telling Congress that its deposit insurance fund is dangerously low if not already negative.  This failure alone is going to cost the fund $2 billion dollars. According to the release, the FDIC still has $21 billion in a separate reserve fund and a $500 billion dollar credit line from the U.S. Treasury.

Regulators on Friday shut down Ohio’s AmTrust Bank, the fourth-largest bank to fail this year. They also closed five others, bringing to 130 the number of U.S. banks to be brought down so far in 2009 by recession and mountains of bad debt.

The Federal Deposit Insurance Corp. took over AmTrust Bank, based in Cleveland, with about $12 billion in assets and $8 billion in deposits. Its failure is expected to cost the federal deposit insurance fund an estimated $2 billion.

About a year ago, the federal Office of Thrift Supervision put restrictions on AmTrust because of concern that its reserves against losses were dangerously low. The regulators told the bank to limit new loans for land acquisition, development or speculative residential construction.

In addition to its branches in Ohio, AmTrust — formerly Ohio Savings — had branches in Florida and the Phoenix area.

New York Community Bank, based in Westbury, N.Y., agreed to assume the deposits of AmTrust Bank and about $9 billion of its assets. The FDIC will retain the rest for eventual sale. AmTrust’s 66 branches will reopen starting Saturday as offices of New York Community Bank, the FDIC said.

Source: AP

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