SANTA ANA, Calif. — Considering southern California consumers are now getting used to bad news about their financial institutions, two more failed Los Angeles banks last Friday is not likely to change the public mood, according to Rudy Hanley, the president/CEO of SchoolsFirst Federal Credit Union.
"We've known for some time that Downey Savings was in trouble and while their CD rates were highly competitive, we really don't look for much of an impact on us," said Hanley, who heads up the $7.8 billion SchoolsFirst.
In a regulatory takeover, the FDIC sold both the $12.8 billion Downey Savings and the $3.7 billion PFF Bank & Trust of Pomona to U.S. Bank of Minneapolis. Separately, a third bank in Georgia, the $681 million Community Bank in Loganville, also failed on Friday.
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Downey, said regulators, had been under a cease and desist order issued by the Office of Thrift Supervision since September and was ordered to raise more capital but was unable to do so. PFF, also aggressive in real estate lending, is a former S&L which converted to a community bank.
"We always get people asking more questions about our financial position after one of these but you have to remember we've had lots of players go away now and I mean there's IndyMac, Wachovia, Washington Mutual and Countrywide," observed Hanley in suggesting a certain immunity by the public to problems among financial institutions.
Downey, he noted, had been one of the more aggressive on CD rates "in the high 3′s and 4′s" but SchoolsFirst "is not about to
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