Only Greek-Turkish Bank in the US, Fort Lee Bank Failure Costs FDIC $14M

Image The failure of Fort Lee Federal Savings Bank, New Jersey's first bank failure of 2012, will cost the Federal Deposit Insurance Corp. about $14 million. Of the five banks to fail statewide since the start of the financial crisis in 2008, that sum is the smallest yet. 2011's failure of First State Bank in Cranford at $45.8 million was the most expensive for the FDIC, among the New Jersey insolvencies. And smaller, of course, is better for managers of the fund that backs customers' deposits up to $250,000. The organizers of Fort Lee Federal Saving Banks were Haralambos S. Kostakopoulos, Yasemin K. Kostakopoulos, Douglas J. Cestone, Paul Oesterle and Anthony J. Sansiveri. The organizers submitted the bank application on June 16, 2000. Kostakopoulos couple was known their support to Turkish American community.
The FDIC said in an optimistic report Monday that its deposit insurance fund is rebuilding from the recent surge in bank failures more quickly than previously expected because the failure rate has slowed.

The FDIC predicts it will spend $12 billion to cover bank shutdowns through 2016. That is $7 billion less than the FDIC's last five-year projection in October.

The federal backstop, paid for by assessments on banks, was at $11.8 billion at the end of 2011, up from a deficit of $20.9 billion at the end of 2009.

After the liquidation of 157 failed banks helped send the fund into deficit in 2010, it returned to a positive balance last year. Meanwhile the number of banks on the FDIC's confidential "problem list" has been declining, going to 813 in the final quarter of 2011 from 844 in the third period last year, according to the agency's quarterly banking profile.

The only other Bergen County-based bank to fail in the past three years, Citizens Community Bank in Ridgewood, resulted in an $18.1 million hit to the fund.

Fort Lee Savings Bank, which had operated from one office, had been under increased regulatory scrutiny for years before authorities shut it down Friday. An October 2010 order from its main federal regulator demanded that the bank stop operating with inadequate capital and underwriting practices, and with insufficient anti-money laundering controls, among other discrepancies. The Office of the Comptroller of the Currency issued in March a more serious enforcement order, a "prompt corrective action," before shutting it down on Friday afternoon.

On Monday a locksmith was changing door locks and the entrance sign was covered with a banner bearing the logo of Astoria, N.Y.-based Alma Bank, a 5-year-old state-chartered bank, which acquired Fort Lee Savings Bank's deposits and some of the assets in a competitive bidding.
(By  Richard Newman,
Last modified onSaturday, 06 May 2017 10:07