In what I feared might become a regular feature here, the Federal Deposit Insurance Corporation (FDIC) arranged for the takeover of the 11th failed bank of 2008 on Friday. As I posted, the FDIC likes to close banks on Friday after hours so they can reopen as branches of the acquiring bank on the following Monday morning. According to the Associated Press, the bank in question is Nevada's Silver State Bank.
Nevada State Bank of Las Vegas will take over the insured deposits of Silver State -- which had $2 billion in assets and $1.7 billion in deposits at the end of June. AP reports that "[Silver State's] branches will reopen Monday as offices of Nevada State Bank in Nevada and National Bank of Arizona in Arizona."
John McCain's son, Andrew, who is also CFO of his mom's beer distributorship, "sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing 'personal reasons.' Andrew McCain also was a member of the bank's audit committee, responsible for oversight of the company's accounting," according to AP.
The failure -- which was caused by "poor-quality loans primarily related to real estate development" -- will cost the FDIC deposit insurance fund between "$450 million [and] $550 million," according to AP. Silver State's motto was "When the casinos treat you poorly, let Silver State treat you like a valued customer," according to its website.
Although AP reports he was adopted by McCain and his first wife, Andrew is following in his father's footsteps. John McCain protected Charles Keating from government regulators because he had arranged a real estate deal for his second wife, Cindy. The failure of Keating's S&L cost taxpayers $3.4 billion. Taxpayers got off relatively cheaply bailing out Andrew's former colleagues.
So if you have money in a riskier bank -- one that is losing money and charging off large volumes of loans -- consider moving it into a bank whose profits have been growing this year. And congratulations to Andrew McCain for bailing out of Silver Lake before the FDIC took it over.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
Reader Comments (Page 1 of 1)
9-06-2008 @ 10:55AM
william lindblad said...
So what? You have any adult offspring?
It will be a new dawn when 30-50 year old "kids" really care about what their father's 2 cents.
As I have many times before - if you want to to do politics, than let us get after those that caused this problem by not stopping it in the bud. (and I don't mean the beer)
I nominate Sen Baucus and Rep. Franks as they are the heads of the Congressional finance committees. I also note that they are both Democrats, but at least I acknowledge that the committees also have Republican members - our problem is the result of people not doing their jobs and it is entirely non-partisan.
Partisan politics belongs in the political forums.
9-06-2008 @ 10:57AM
william lindblad said...
Oh, I forgot - please tell the world something new:
FDIC STATEMENT: We close banks on Friday so that there is little effect on depositors.
Echo?
9-06-2008 @ 3:49PM
william_linbad_is_crazy said...
This is just another example of mccain "family values" ..
senile idiot.....glad mccain is age the end of the curve ;)
9-06-2008 @ 4:18PM
Chris K. said...
Why the hell hasn't AOL pulled you from this blog roll yet?
You teach at a business school, right? So you should know a little bit about how a BOD works, right?
If you see a director join a board, including the audit committee, in February, then resign in July, what inference do you make? I think most people that know anything about boards would assume that he felt something was wrong but was in disagreement with the rest of the board, so he left. That should have raised warning flags for investors, at the least.
Regarding Keating, the Senate report states "Senator McCain has violated no law of the United States or specific Rule of the United States Senate" and he was cleared of all charges.
You bring discredit to Babson. I can't believe they give you access to a classroom.
9-07-2008 @ 6:52AM
al coholic said...
Are you a bad driver if your adult, adopted son gets a speeding ticket? That's what you are inferring.
Peter, I read your posts but many seem to be so uninformed and transparently political that I have to agree that your status here should be questioned.
Not to mention the facts thats board members that are brought out in comment #4.
Your assignment. Quit teaching, get a job, and learn how the business world really works. Then report back to us.
9-07-2008 @ 6:40PM
LJ said...
Apparently liberals will stop at nothing to smear McCain, even to the point of trying to infer wrong doing by his ADULT son. How many of us are responsible for the actions of our ADULT children?? It would seem he was not on the board long enough to make any major decisions or do any damage. I would gather he felt uncomfortable with something and pulled himself out of it. And, the 11th bank to fail in 2008? In the WHOLE of the USA? Out of HOW many banks??? It does not seems so bad statistically. Instead of trying to use guilt by family membership, how about some focus on Dems who can't keep their pants on...like Edwards, Hart and Clinton?
9-08-2008 @ 2:02AM
jerry mcdonald said...
from the notes, you are Mccain fans.I suggestneither party is worth a nickle.Mccain smears himself,he doesn't need help.Since he lied to his current wife ,when he met her,he's pushed illegal immigration,he admits to knowing nothing about business,and panders to anyone he can buy.Bush ,lieing,and bankrupting his business didn't disqualify him,why should it mccain.
9-08-2008 @ 6:44AM
rick said...
I agree with most posters. You are mis-guided and partisan. Glad my kids don't go to Babson. Since this is a political blog (apparently) I say vote for McCain since creeping socialism will destry America as we know it.
10-12-2008 @ 5:19AM
Rick Cain said...
I agree to a point. If Al Gore's son gets caught with pot, or some other kid of a legislator gets in a minor traffic accident, frankly its not big news.
Now when the son of a presidential candidate is deeply involved in a bank failure that cost the FDIC billions, and his job was "financial oversight", then maybe it is worth an article.
9-24-2008 @ 9:03PM
Sarah said...
Congrats Andrew McCain for bailing out before you got caught and as far as you referring him as an adult son, the apple doesn't fall far from the tree.