Georgia CU League CEO Defends the Health of Banks in His State
The latest Georgia failure on July 24 included a six-bank chain of community banks, led by the $2.8 billion Security Bank Corp. It was placed into receivership by the FDIC and sold to a Pinehurst bank consortium.
Commenting on what The Atlanta Journal Constitution termed a "banking crisis," the president/CEO of Georgia Credit Union Affiliates, Michael Mercer, called that characterization off-base. He pointed out that large Georgia banks remain solid and well-capitalized CUs are in fine shape.
Mercer maintained that the public is not panicking. He added that so far "this is not like IndyMac with long lines of customers," in reference to the July 2008 collapse of the billion-dollar California thrift.
Mercer noted that Georgia banks have been suffering under a Wall Street Journal label this month, which called Georgia the "Chernobyl of banking." Mercer, along with Georgia CU executives, stated that bank failures are a negative for all "since they undermine public confidence in both banks and credit unions."
The league CEO also said small Georgia banks seem to have run into financial trouble after a risky plunge into lending for numerous strip malls and shopping centers, triggering a series of real estate loans gone awry.
Many of these small banks also engaged in brokered CDs, which banking agencies maintained have proved their undoing, figuring also in other 2009 failures.
Donald Decinque, president/CEO of the $1.9 billion Atlanta Postal CU, said "no one can say we're happy when these kinds of things happen." It's not just failures of banks or CUs that intensify negative vibes among consumers, but mergers also call into question safety and soundness according to Decinque.