According to Yahoo Finance this afternoon: [Thanks L!]
WASHINGTON (AP) — NetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an excessive level of mortgage defaults.
It was the largest savings and loan failure since the tail end of the industry’s crisis more than 14 years ago. Federal regulators appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta, Ga.-based NetBank.
So what’s the difference between this one and the rest of the list at Implode-o-meter?
While dozens of mortgage companies have closed due to soaring defaults of home loans made to borrowers with weak, or subprime, credit, those problems previously had occurred among non-bank lenders such as New Century Financial Corp. NetBank, in contrast, is federally regulated.
As for customers:
"Customers of NetBank should have confidence and security knowing that they will have access to their insured funds in a timely and orderly manner," FDIC Chairman Sheila Bair said in a prepared statement.
The FDIC insures bank deposits of up to $100,000.
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For it being a Friday, at the end of the month, and the end of Q3, I’m rather surprised at the lack of blockbuster news today.
Technically the FDIC can not shut down anybody. The FED regulators did that. However, the FDIC is one of three auditors that can easily get the Feds to do it. FDIC is now the receiver/trustee for NetBank. They will pay off depositors up to 100k and sell the remaining assets. Note that depositors with money over 100k are first in line for remaining assets which in this case should cover most. Losers are the stock holders and any commercial paper issuers and bond holders (doubt there were many).
very scary! This is only the beginning. This is the real reason for the rate cut, is to avoid most banks from opening the books. Watch out for Indymac. They have alot of bad loans.
rebrokerworking4u, the federally regulated banks are fine. NetBank was a one trick pony. It has been skirting the BIS regulations for years and had one of the highest premiums for FDIC insurance. Blame the rating agencies that rated the junk subrpime CDOs that NetBank bought and held for investment (whoops). If those CDOs were not rated AAA then they never would have been able to hold much of them. Most US banks are holding very little of these CDOs, not because they were that smart, but because there have been other more profitable uses for money.