I noticed this story in the Albuquerque Journal a few days ago at my local coffeeshop. Charter Bank — one of the best, and stable, local banks is being shut down by regulators. Why, I asked myself..?
Simple: the Office of Thrift Supervision decided that Charter wasn’t carrying enough “toxic assets” on its books. Charter had a low default rate, due to their being a responsible lender that was careful about its low-income housing loans (for which it was known out here, by the way…) OTS wanted Charter to up its allowance for defaults from 10 to 50 million, but they did not have to — their commercial and housing loans were solid because they lent to responsible people and businesses (only a third of a percent of their loans were delinquent.)
Despite this, the OTS classified many of their loans toxic and demanded they find new capital to prevent insolvency…or face closure. The federal government is forcing this solvent business to do what they want, or they’ll use the ham-hand of government to close them. Why?
I suspect this was a use of government power to force Charter to accept new “investors” looking to make a quick buck off of a successful bank. Who could possibly stand to gain from that..? This is New Mexico — you look to the Roundhouse. Someone, either in the state congress or the governor’s office, was/is looking to snap up Charter and make a quick buck at the customers’ (and ultimately the public’s) expense.
