Florida Bank, Used as ATM by Insiders, Won TARP Loan But Now Teeters

[seafan]

Source: ProPublica

.....

The rise and fall of U.S. Century, while certainly more extreme than most banks, exemplifies the fast-and-loose banking culture that led to the financial crisis, which continues to drag down the global economy. It also epitomizes both the failure to regulate the banking sector during the pre-crisis boom years and the slipshod approach to the bailout that followed the bust. Above all, it's about losers and winners. The losers are taxpayers and local residents grappling with the ill effects of suburban sprawl. The winners appear to be a group of wealthy and politically connected businessmen who created a bank that served as their own corporate ATM, funneling tens of millions of dollars to ventures in which they had a stake.

"Insider loans" -- loans to directors or officers of the bank -- at their peak exceeded 94 percent of U.S. Century's total equity capital. While high levels of insider lending are not uncommon in the early years of a bank startup, at U.S. Century they continued for years. Many of these loans were for speculative real-estate projects, some of which are now defunct or gravely troubled.

.....

Many of U.S. Century's officers have been prolific political donors. In the bank's 10 years, the directors have given more than $350,000 for federal races alone, with most of the money going to Republicans. No U.S. Century director has ever been charged with legal wrongdoing related to campaign financing, but the bank itself was involved in a controversial transaction with Marco Rubio before he became Florida's junior senator.

Rubio received a 2006 loan from the bank while serving as Florida's state house speaker. A story broken by The Miami Herald in April 2008 revealed that the bank gave Rubio a home equity loan of $135,000 shortly after he bought his house for $550,000. But a month after the purchase, the house was appraised at $735,000. The $185,000 gain in equity in just 37 days paved the way for the U.S. Century loan. Rubio initially failed to disclose the loan on his public financials. He and U.S. Century have consistently denied wrongdoing.


Read more: http://www.propublica.org/article/florida-bank-used-as-atm-by-insiders-won-tarp-loan-but-now-teeters

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A major hat tip to Eye On Miami for pointing us to this blockbuster story.

From gimleteye at the blog:

.....

The biggest news: evidence that US Century was already failing when it received the largest bailout of TARP funds to Florida banks. The politically connected bankers claimed, at the time, that the bank was a "healthy financial institutions" when it was anything, but. As EOM has reported, the bank has been used as a piggy bank for board directors and insiders. Although slammed with a harsh consent order by FDIC, the underlying facts may never be disclosed to the public. In the meantime, US Century is stonewalling the press. It refused any comment to ProPublica and its founder, Sergio Pino, refused to answer repeated phone calls.

.....

So, instead of being the target of enforcement action more than two years ago, U. S. Century Bank was awarded $50 million in TARP funds, courtesy of the taxpayers.

Lovely, isn't it?


By the way, Sergio Pino has long-standing Republican ties in Florida, including serving as a generous donor to Jeb Bush's education *think tank*, the Foundation for Florida’s Future, currently in use by Jeb Bush as a vehicle to peddle his nationwide push to privatize public education.


Oh, and Marco Rubio and U.S. Century Bank's 'insider loans'? Well, well, he's right in the middle of it too. Isn't that special?

Why Rubio's equity loan is our business, April 2, 2008


This really shouldn't be a surprise to anyone at this late date about the junior senator from Florida.



There aren't going to be enough jails to house all of these perps.


Criminals in Florida...



Funny, how the same names keep popping up.

[No Elephants]

1. "While high levels of insider lending are not uncommon in the early years of a bank startup.."

Really?

The kind of loans with which I am most familiar in any startup are loans from insiders TO the infant corporation, not loans from a start up to insiders.

Why would loans from a baby bank to insiders even be legal?

[seafan]

2. We still wait for Justice to make an appearance in Florida.

More from gimleteye this morning at Eye On Miami blog:



October 20, 2011

The astounding report by ProPublica on US Century Bank shows the nation's banking regulator, FDIC, asleep at the switch when the largest distribution of TARP funds in Florida was made to politically connected directors of the Miami-based bank who substantially shaped the state's political landscape. (Every county commissioner in Miami-Dade County, who solicited for money through US Century Bank, its friends and family as the housing boom metastasized in wetlands and farmland in West Dade and historic Everglades, knows exactly what I mean.)

.....

US Century Bank would have been closed down years ago, if not for the cash infusion of tax payer-backed dollars through TARP. The question is not answered: how did FDIC miss the disaster at US Century? With respect to the TARP moneys, either US Century lied in its filings and "cooked the books", or, it received a political push from its friends in DC. Whatever the answer, the public deserves to know. To ProPublica, the bank issued blanket "no comment" and refusal to answer phone calls.

Those details could be disclosed in a FDIC enforcement action against US Century and its directors, including Ramon Rasco-- key figure in the Homestead Air Force Base fiasco--, or shareholder lawsuits.

.....

US Century Bank became popular as "local boys made good". Depositors have no idea. Bank directors bet the farm on land speculation; manipulating local government processes, turning a federally chartered bank into a personal piggy bank (US Century Bank is rated "zero" by Bauer Financial. Measured against peers, its ratio of insider lending to standard banking metrics is off the charts. So far, there is no way to know exactly what loans, for mortgages in what areas of Miami-Dade, those ratios connect to.), tying up environmentalists and citizens and neighborhoods in knots, from Doral to Homestead. When environmentalists cry "foul" and say the playing field isn't level, this is exactly the example: civic groups cobble together a few dollars to support outreach efforts like "Hold The Line" on the Urban Development Boundary (the target of US Century Bank directors/speculators while regulators in local and state agencies cower in their foxholes) while the lobbying effort of insiders is funded by manipulating banking rules and laws.

From a 30,000 foot view, all the environmental skirmishes -- from water quality to wetlands to the Urban Development Boundary, Everglades Restoration and the fiasco of Homestead Air Force Base (Ramon Rasco and partners) that tied up the 2000 presidential election in Florida -- were for naught. It was about the crack cocaine of the housing boom and the massive wealth transfer grounded in arrogance and greed.

The public was taken for fools then, but the tables are turning in the worst economic crisis since the Great Depression.

To find a symbol of what went wrong, and is still going wrong: take a close look at US Century Bank. Earlier this summer, the FDIC issued one of the toughest Consent Orders ever. While the FDIC isn't required to publicly disclose an update, the public should demand one now.

The Good Old Boyz' greed has no bounds.

This has been the story in Florida since Republicans seized total control over state government, beginning in 1994 and culminating with the punitive arrival of Jeb Bush in the governor's mansion in 1998.

It's because a small faction of extremist Republicans have commandeered our state legislature (Senate since 1994/House since 1996), driven by a zealously conservative, authoritarian governor, Jeb Bush, (1998-2006), and bolstered at the federal level by the same extremist faction on the US Supreme Court on December 12, 2000.


Since then, Floridians have seen nothing but calculated pillage of the state's resources; stripping of our financial and regulatory mechanisms; weakening of the state's economic engine; pollution of our environment and weakened water standards; clampdown on our voting rights; destruction of our public educational institutions; tax breaks lavished on wealthy developers and investors with little to nothing for regular people; a premeditated push to destroy workers' unions; a harsh stand against women's reproductive rights; interference in the privacy of end of life decisions (RIP Terry Schiavo); repeated Legislative attacks on state's judicial system, including the state Supreme Court.


We have seen these same politicians lining their own pockets, using the full power of state government to engineer it.


Today, we see that U. S. Century Bank, the largest Florida recipient of TARP-funded taxpayer bailout money, has served as their personal piggy bank.


And now, we have Rick Scott.



This is the type of mammoth greed and arrogance of a privileged few that is destroying Florida, and with it, the lives of millions of Floridians who abide by the rules.


We still wait for Justice to make an appearance in Florida.

[sarcasmo]

3. There are so many politicians and bankers that belong in prison.

Weed good, Greed bad.

[Scurrilous]

4. K & R

:thumbsup: