Insider Loans Distrusted by FDIC's Bair as Georgia Bank Failures Lead U.S.

[marmar]

Insider Loans Distrusted by Bair as Georgia Failures Lead U.S. Share Business
By Peter Waldman, David Mildenberg and Laurence Viele Davidson


Dec. 8 (Bloomberg) -- James H. Blanchard and A.W. “Bill” Jones III played golf and hunted turkey, quail and deer together. They were passionate about servant leadership, the idea that corporate executives should emulate Jesus Christ as stewards for their workers, customers and communities.

Together they were on the boards of Blanchard’s Synovus Financial Corp. and Jones’s Sea Island Co., a closely held resort on Georgia’s Atlantic coast. Starting in 2001, Synovus loaned Sea Island what eventually totaled $220 million to turn the resort into the “Pebble Beach of the East.”

The loan, which has since been restructured and stopped paying interest, provides a window into the role that insider lending and board oversight plays in regional bank stocks’ decline this year and the greatest number of U.S. bank failures since 1992, led by Georgia. At least one larger bank without insider ties rejected the Sea Island deal.

“What happens a lot at community banks is they work the crony network, rightly or wrongly,” said Christopher Marinac, a banking analyst with FIG Partners LLC in Atlanta. In Georgia, “you’re seeing a lot of that,” he said.

The Federal Deposit Insurance Corp. cited failures of board oversight in 83 percent of its post-mortems of failed banks nationwide this year, based on reports by the agency. Directors failed to “ensure that bank management identified, measured, monitored, and controlled the risk of the institution’s activities,” FDIC investigators wrote in several of the reports, called Material Loss Reviews. ..........(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=aukpiXHglqP4&pos=10

[badgolfer]

1. Georgia Banks & State Legislators

Let's not forget that a lot of the State Legislators are bankers and insurance people. The State should tighten up the regulations for starting a bank but you most likely will never see that. There were just to many banks in the State especially in the Metro area. They were as many as gas stations and drug stores.

[Hannah Bell]

2. Republic of Money: AW Jones III

is son of this guy:

http://en.wikipedia.org/wiki/Alfred_Winslow_Jones

whose father, the "GE Executive" was American (not Australian, despite having been posted there when Alfred was born), & was 2nd cousin to this guy:

http://en.wikipedia.org/wiki/Frederick_Winslow_Taylor

and this guy:

http://www.georgiaencyclopedia.org/nge/Article.jsp?id=h-863

who was AW Sr's partner in developing the Georgia Coast.

http://www.cigaraficionado.com/Cigar/CA_Features/CA_Golf_Detail/0,4475,70,00.html

other interesting relatives as well, very connected.