Reply #58: The bank in St Stephen [View All]

[burf]

basically ran outta money.

This from the Mpls Star Tribune: St. Stephen State Bank, a 90-year-old community bank founded by farmers that bet big on real estate development, was shut down by government regulators late Friday after running out of money.

snip

Though tiny in size, St. Stephen State Bank was heavily invested in commercial real estate. The bank had the highest concentration of commercial real estate loans, such as construction-related lending and mortgages on commercial projects, of any bank in the state. Losses on those loans steadily ate away at the bank's capital, the money it keeps on hand to cushion itself against losses.

Link: http://www.startribune.com/business/81798047.html?page=1&c=y

It looks as though they were playing the "mark to fantasy" game and when the music stopped in their case, they didn't get a chair!

The article mentions how the FDIC is sweetening the pot for other banks to take over the failing institutions. The incoming banks get the failures for half the debt, the FDIC picking up the other half. I guess this is designed to make Shelia's allowance go farther.

Good weekend to all and thanks Demeter for all the work you put into the WEE.