Big Local Bank Faces Federal Takeover: Sources
San Diego National Bank faces takeover Friday, according to sources
By ERIC S. PAGE
Updated 3:45 PM PST, Fri, Oct 30, 2009
San Diego National Bank has been in financial trouble for several months now, and industry sources say federal regulators will take over the bank on Friday.
Bank management held a staff meeting on Wednesday and told San Diego National employees that the Federal Deposit Insurance Corporation (FDIC) will take over the company on Friday, according to sources.
Unfortunately, after nearly 100 such takeovers this year, the process has become familiar to some.
"The FDIC sends people down to each branch, and about five minutes before closing time, the bank examiners who have shown up at the branch from the FDIC will announce that the bank is being closed," said Professor Arnold Rosenberg of the Thomas Jefferson School of Law.
San Diego National Bank president Robert Horsman did not return calls nor would employees comment on what might happen.
Earlier this week, the San Diego Business Journal reported that the FDIC was accepting bids to buy the bank. Rosenberg said bids are usually accepted on Tuesdays, which would have allowed managers to inform their employees on Wednesday.
The bank's problems stem from losses in investments with Fannie Mae and Freddie Mac. It also had a high concentration of construction and real estate loans.
Clients of the bank should not be worried, however, said San Diego State professor David Ely.
"To an individual customer, depositor, whatever, typically they see no interruption at all to their services," Ely said. "They still have access to their funds, Their checks will still be good."
Ely said it's certain that there will be more bank takeovers before the end of the year.
First Published: Oct 30, 2009 3:19 PM PST
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