Law on Rice

We’ve been talking about how banking regulation works in class, so I thought I’d share a news report I heard on KUOW (the local NPR station) this week. Five banks in the region got nastygrams from bank regulators.

[The banks are] ordered to correct – quote – “unsafe or unsound banking practices.” The recipients include Bend, Oregon–based Bank of the Cascades, Twin City Bank of Longview, Washington, Anchor Bank of Aberdeen, the Bank of Tacoma, and Arlington, Washington–based North County Bank. Washington State Division of Banks Director Brad Williamson says customers should not do anything rash since FDIC insurance protects their deposits up to $250,000.

Notice that last point about not doing “anything rash”? One of the primary goals of banking regulation is to prevent bank runs and inspire confidence in the system.

It looks like KUOW and I are a little behind the curve since most of these letters were issued back in August. Here’s one of the letters for Bank of Tacoma. The full story and the news report is here. In addition, I’m still getting more notices from the FDIC of other banks failures: two or three in all this week.

The shakeout continues…

I’m having lunch at my favorite teriyaki place after my first class of financial institutions and the law.

My professor also sits on the board of State Farm and has years of experience in banking. Some of the students also have banking background.

In talking about the financial crises, I asked if part of the problem was that there’s just too much cheap money sloshing around the system. He said lots of people want to blame Greenspan, but the Chinese were also pumping a lot of money into the economy.

It’s going to be a great class!