SANTA ANA, Calif. — Two more failures of California thrifts arebeing taken in stride by consumers, according to Rudy Hanley, thepresident/CEO of the $7.8 billion SchoolsFirst Federal CreditUnion.
“We've known for some time about Downey Savings in trouble and theother was smaller with less of an impact,” said Hanley, commentingon the Nov. 21 collapse of the $12.8 billion Downey Savings &Loan and the $3.4 billion PFF Bank & Trust of Pomona. Both weretaken over by regulators and sold to U.S. Bank ofMinneapolis.
Downey Savings, like the major banks, has been “highly competitive”on CD rates “in the high 3's or 4's,” said Hanley, but SchoolsFirstis not about to match them now. SchoolsFirst CD rates have beenroughly “50 to 100 basis points” below some of the leaders, hesaid.
Hanley said that while the public is likely to be asking morequestions about financial stability in light of the Downey and PFFfailures, California consumers for the most part have now come toaccept these calamities in stride.
“Remember we've had lots of players go away now…there's IndyMac,Wachovia, Washington Mutual and Countrywide,” said Hanley.
Downey, said regulators, had been operating under a cease anddesist order issued by the Office of Thrift Supervision sinceSeptember and was ordered to raise more capital but was unable todo so.
In a separate failure on Nov. 21, the FDIC closed the $681 millionCommunity Bank in Loganville, Ga., selling it to the Bank of Essexin Rappahannock, Va.
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