Wednesday, May 13, 2009

Congressmen question First Bank closure

Simpson, Minnick look for answers from OTS, FDIC

Express Staff Writer

Concern over the failure of the First Bank of Idaho has reached from the Wood River Valley to Washington, D.C.

Idaho's two House members, Republican Mike Simpson and Democrat Walt Minnick, are looking into the closure of the Ketchum-based bank, shut down by the Federal Depositors Insurance Corp. on April 24.

Simpson and Minnick sent a joint letter Thursday to Sheila Bair, chairwoman of the FDIC, and John Bowman, acting director of the Office of Thrift Supervision, an agency of the Department of the Treasury that regulates federal savings associations.

"Without question this closure is negatively impacting our constituents," the lawmakers from Idaho wrote in the letter. "Not only have the investors lost millions in personal investments, but many of the businesses that have banked with First Bank of Idaho for years have found their credit lines frozen."

The letter requests information about the closure, specifically why the bank was shut down if its managers were close to closing a deal to collect $10 million in investments, as has been claimed by former First Bank of Idaho CEO Everett Covington. The deal would have helped the bank increase its liquidity, the lack of which was the reason for the closure.

"In particular, we are concerned that the OTS and FDIC did not give the bank enough time to capitalize properly, even though it is our understanding that they were nearing the end of negotiations with a willing investor," Minnick and Simpson wrote. "It is our understanding that the OTS was well aware of these efforts."

As well, the letter requests information on the policies of the OTS pertaining to the closure of banks to determine if it was done with proper reason.


"We want to make sure that they followed procedure and didn't just take this action without following their stated guidelines," said Simpson spokeswoman Nikki Watts in an interview. "If we find out they didn't follow their policy, we can make a decision on where to take it from there."

The congressmen asked in the letter if the actions of the FDIC are reversible.

Watts said Simpson and Minnick received numerous phone calls from constituents in the Wood River Valley with concerns over how the bank was taken over by the FDIC. She said the congressmen received further information and background from First Bank of Idaho officials that had traveled to Washington to talk to legislators about the issue.

"The main concern is the how businesses and constituents are being affected in the valley," Watts said.

Watts said she hopes to receive a response from the OTS and FDIC by next week.

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