Another bank goes bust. This time, it’s personal.

Crossposted at Orange

On a few occasions in recent years, I’ve written about my mother’s death, the horrific relationship I had with my brother, and commented in various diaries about the status of healthcare, the financial meltdown, the state of the economy, etc.  In all of this, one common thread linking this has been my heartfelt relief that my mother died before the crash, before we had to rely on the sale of devaluing assets to care for her.  But she was not the only sick member of the family.  

The recent news of the SEC’s fraud case against Goldman Sachs coincided with other news of a much more personal nature.  The bank she invested in was taken over by the FDIC this past Friday, April 16, 2010.  Today, my estranged brother died of lung cancer.  He was 59, a longtime smoker.  

I wrote privately to bobswern and to KelleyRN2 this evening about these two events.  As for my brother’s death, with all the bitterness of the relationship, I am simply relieved he is no longer suffering.  I cannot be hurt or harmed any longer by his cruelties, but that does not mean I feel nothing.  His death need not have been as hard as it was, nor come as swiftly as it did.  That suffering occurred because of the perfidy of the tobacco industry, rigging an insanely addictive product, and because of our country’s lack of single payer healthcare.  But it is also directly tied to the financial collapse, to the casino Wall Street became, and the damage done to one local bank gone regional in Florida.  You see, he held stock he couldn’t sell, thanks to banksters’ games.

bobswern’s diaries have helped me make sense of what happened to the bank stock I inherited from my late mother.  It was a local bank gone regional, and had started as a small community-based bank.  They raised the capital to start it by selling stock to local members of the community, and it was meant to function strictly as a hometown bank.  They added branches over the years slowly but steadily, until the late 1990s and early 2000s, when they began expanding at a faster pace.  As the real estate bubble grew, so did the bank.  When my mother died, each of us three children were bequeathed equal shares.  Each tripartite split was worth a lot of money for each of us when my mom died.  The estate wasn’t settled until after Bear Sterns collapsed.  As more and more of the big commercial entities on Wall Street ran into trouble, as the mortgage crisis devastated the housing sector and swept into commercial real estate, the bank stock the three siblings held diminished in value, rapidly.  Today, I could use my stock certificate to start the fire in my charcoal grill, and it would be as good a use of it as anything else.  It’s worthless.  Now, I could not ethically sell it for even as much as a penny.  

Today, the day my brother died, I learned that that bank has officially failed.  The FDIC took it over on Friday.  This isn’t a shock — after all, I figured out several months ago that this was going to happen.  The economy down there is still in horrible, horrible shape.  Foreclosures on houses in their territory are sky-high.  This fall, I heard that they were repossessing cars that the foreclosed-upon were using for shelter.  A lot of people where I grew up were living in their cars, and they were even losing that makeshift shelter, too.  Out of idle curiosity a couple of weeks ago, I ventured onto, and ran a search for houses under $250,000.  I saw oceanside condos on the list that were listed at prices I hadn’t seen since the late 1980s.  One penthouse condo was listed at about $245,000.  A five bedroom, three bath house with pool and tennis court was listed well below $200,000.  That should tell you how bad it is.  The company that owned the bank, and that issued those shares, still exists, but everything that made that company what it was came from that bank.  It might as well not exist any more, either.

One of the first notifications I got from the bank, after the estate settled — and after I bought my house — about the stock was that they were experiencing difficulties.  They wrote, honestly and forthrightly, that they had invested in collateralized debt obligations.  That, and the horrific damage that has occurred during the recession to the regional economy, sealed that institution’s fate.  What I do not know is whose CDOs they bought.  I would like to find out that information, and I am not sure how to go about it.  I have no idea where to even start.

I know that I will never see a red cent of that portion of my inheritance.  It’s not about the money for me.  It is about knowing which entity specifically sold these toxic assets to that bank, and what pitch they threw to the board of directors, and when.  Some of the board members were the parents of my childhood schoolmates.  I want to know so I can take that information to my state’s senior US Senator, and anyone else who will listen to me, and ask her personally to help make sure we get real financial regulation again.  We can’t, as a nation, afford this nonsense any more.  It’s got to stop, now.  Congress has to fix this.  

I am not talking about protecting fat-cats.  My mother wasn’t one of those people, she didn’t come from one of those families.  She worked damned hard for many years in public education.  My mother sank a great deal of money into that bank stock, starting in the early 1980s, buying a few shares once a month for years.  She was a child of the Depression, and grew up a Southern Baptist minister’s daughter in rural Georgia during the late 1920s and through the 1930s.  She made this bank stock the centerpiece of her investment strategy because she believed with all her heart that this was the safest investment she could possibly make.  Bear Sterns collapsed a couple of months before her estate closed.  I just thank God fasting that she did not live long enough to have to rely on the sale of that stock to pay for her care (she had surgery for a brain tumor that did not go well, and the tumor grew back, killing her).  

More, for all that I feared him, I wish my brother had had access to the funds a sale of healthy stock would have brought him.  My brother could have used that money for health care.  He died of lung cancer early this morning.  For all the bitterness between us, as hideous a relationship as we had, I still wish he could have had the funds for medical care — for you see, he had no health insurance and he was just a few years too young for Medicare.  My sister-in-law is going to lose their home — they haven’t been able to pay the mortgage the last two months, because what money they did have went for the medical bills.  She’s now destitute and will probably drop the keys into the mail before she moves in with her siblings in another state.

How many other families across this country have had loved ones die because the funds they needed to pay for care evaporated in this colossal casino game?  Stocks, municipal bonds, 401k’s, pensions, all used as chips in a giant game of five card stud — but the dealers kept the all the aces and face cards tucked up their sleeves.  All of us need justice, which we won’t get, can’t get, will never get in our lifetimes.  But after wondering what we would have done for my mother, after hearing how my brother suffered to get the palliative care he needed, I’d settle for just seeing the rules pre-Gramm-Leach-Bliley reinstated, so this never happens to anyone else’s family again.  That would be enough.



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    • Noor B on April 21, 2010 at 09:29

    When do ordinary citizens get their interests protected in Washington?  I really want to know.

    • Edger on April 21, 2010 at 09:55
  1. Condolences.

    Our political class is not up for their job.  Your story is both epilogue and prelude.

  2. are with you, Noor B.

  3. the name of the bank?

    I used my 401k to pay for living expenses while searching for work for two years.  

    There is this thing called a 10% penalty for early withdrawl, but what choice did we really have? Not eat?

  4. As for your questions:

    1) It or this sort of thing ends when we make it end. That means making elected officials accountable to us (all of us).  That means pushing big money out of Washington.  That means having a educated electorate that votes.

    2) As for finding out about CDO, possibly two ways and it depends on how far you want to take it – one would be to retain a lawyer because as an owner/shareholder there were certain duties owed to you by BOD and management or two, now that FDIC has taken over bank but I am not that sure about this – a possible freedom of information (FOI) request for documents related to CDO purchase – particularly Offering Circular or related disclosure and/or marketing documents.

    Yesterday and probably in the coming days Wall Street will talk about how IMF has lowered the cost of the bailout.  This is absolute bullshit because what is not included in this cost are the much related costs of millions of people losing their homes, their jobs, and their retirement savings.  

    If ANYONE from this Administration sings the praises of such a bullshit report then this Administration deserves ONE TERM.

    • Xanthe on April 21, 2010 at 22:56

    My the perpetual light shine upon them.

    Yes, these are the kind of losses that really can’t be calculated.  And they will  last for generations.


    • sharon on April 22, 2010 at 01:04

    but somehow it feels even more wrong when it happens to someone you know.  so sorry to hear about this noor.

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