Friday, June 26, 2009

Citizens Bank officials loan to selves, quietly - how common is this?

I keep seeing crowdsourced journalism opportunities wherever I look.

Today's dead-tree-based The Union has an extremely interesting story from Dave Moller, about our locally-owned bank - "Citizens Bank Officials loaned [to themselves] $11 million" ("...the lending institution's leader would not divulge who received the loans when, or how much they are for"; "the bank landed $10.4 million in federal [TARP] funds"; "“We're a private that information is not public”"; "“It's common for directors and bank officials to get loans. They are typically some of the best borrowers, because they're stakeholders,” [bank president and CEO Judy] Hess said.")

How prevalent is this sort of arrangement in other communities? Are there any regulations against it, and if not, what keeps banks from serving primarily to benefit their owners?
(Doesn't this become the S&L debacle all over again?)

Update: in comments, Jeff P. pointed to this SacBee story on the phenomenon at a different bank -
A Bee investigation of internal shareholder documents and public lending records found that at Community Business Bank, those likely to benefit most from the taxpayer-funded windfall are a small group of insiders and their associates. From its inception 3 1/2 years ago, the bank has steered many of its assets to a handful of directors, as well as their relatives and business partners.

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