When you think of New Mexico, I'll bet that the first word that does not pop into your mind is "grass" (unless it's some of that fine New Mexico Feathergrass). You'd better get used to it, because it appears that the recent seizure of Charter Bank (a subject about which my recent blog posts ruffled some feathers) is in danger of igniting a "grass roots movement" that has nothing to do with tea baggers, birthers, or that politician from Alaska who keeps ripping off Tina Fey's act.
Realtor Peter Parnegg pulls no punches when it comes to his opinion of the Jan. 22 federal seizure and sale of Albuquerque’s Charter Bank to a Texas-based bank.
“This is as absolute a heinous crime as there is. They stole that bank – the government stole that bank from its rightful owners,” said Parnegg, CEO of Coldwell Banker Legacy, the largest residential real estate firm in New Mexico.
So Parnegg, whose Albuquerque firm did lots of business with the locally-owned Charter, is out to try to get the sale of Charter to Beal Financial Corp. reversed, or to at least let the Office of Thrift Supervision and the Federal Deposit Insurance Corporation know that many Albuquerqueans are angry about the seizure and sale of the 30-year-old community bank.
“I’m trying to get a grass roots, groundswell of support for Charter and see if I can get 10,000 to 20,000 people to write or call our senators and congressmen to express their dismay and outrage,” Parnegg said. “This is an injustice and an absolutely misguided policy.”
As far as getting the seizure overturned, that's a pipe dream. With all apologies to Tim Geithner, "that will never happen." On the other hand, as the facts play out in the aftermath of the seizure, it will be interesting to see how the regulators react to this type of popular and political anger and whose ox ends up being gored. I had a client whose thrift was seized in the early 1990s by the OTS, and when the RTC investigators finished their last interview with the owner, they asked him why he didn't sue the OTS? Even with that shocking bit of encouragement, he decided that he had better things to do than dance with a bear for the next 15 years. While I always thought he had a heck of a case, it was one of the very few I've seen in over 35 years of swimming in this cesspool.
At best, the owners might win some money damages, but the discretion the law and the courts afford the regulatory agencies in these cases make winning even that a long shot. In addition, I've heard noises from various quarters, none of which wish to be identified, that there's more to the case of Charter Bank than meets the public eye. Inasmuch as the regulatory examination reports are confidential and the contents can't be disclosed (legally) at this point by those "in the know," I take all intimations of "if only we could tell the entire story" with a grain of salt. I've seen too many examination reports filled with distortions and inaccuracies to consider them anything other than somebody's opinion. It may take a lawsuit or two (or three) in any of these cases to get close to "The Truth," and as we all know, when trial attorneys get their hands on the "facts" the spin doctoring can make you too dizzy to sort fact from well-told fiction.
In the meantime, it will be interesting to see how long the public anger stays stoked, how far this "grass roots movement" spreads beyond Albuquerque, and whether it successfully utilizes the only method of recourse that's likely to have much practical effect: politics. Immediately, it seems that path may show some promise.
Meanwhile, U.S. Rep. Martin Heinrich, D-NM, said he will start looking at how Congress can change banking regulations. Heinrich met with three Albuquerque community bankers on Feb. 1 in his Downtown office. Those bankers told him that the OTS was going after community banks after getting criticized for failing to spot and stop the problems in large national banks that led to the nation’s financial meltdown.
“Local community banks did not get us into the economic mess we are in,” said Main Bank President and CEO Ron Shettlesworth. “It’s the top 15 to 20 banks versus the rest of us.”
Shettlesworth said that big banks should be broken up into smaller ones so they are not considered too big to fail.
Union Savings Bank President and CEO Sam Collins said the “regulatory pendulum has swung too far” in terms of punishing community banks.
Heinrich seemed to agree.
“I think the OTS is part of the pendulum swing on not enforcing regulations on big institutions,” Heinrich said. “And now they are taking it out on smaller banks. It’s an easier nut to crack. We need to get to the heart of the problem.”
"Get to the heart of the problem." That's something we'd all like to get to. Good luck.
