Bank Lawyer's Blog

Camden Fine Fires Off A Fine Salvo

In  recent opinion piece for Bloomberg News, ICBA CEO Camden Fine was in fine fettle, ranting about his favorite topic: new regulatory burdens are strangling community while the largest banks are doing just fine, thank you very much. Among his salient points are the following:

The megabanks are benefiting from what Bloomberg View calculated is an $83 billion annual taxpayer subsidy, the value of implicit guarantees by the U.S. Treasury. Bloomberg View was correct to characterize the too-big-to-fail subsidy as “a major driver of the largest banks’ profits.”

Perversely, Federal Deposit Insurance Corp. data show that large banks have both the lowest credit quality and the lowest cost of funds in the industry. Community banks rank the highest in both categories even though they have had to compete for years against the megabanks’ access to cheaper money in pricing loans. In addition, community banks must compete against the big lenders’ lower comparative costs in handling regulatory paperwork.

While Cam complains that this is "morally wrong," I suspect that in a nation overrun with Pontius Pilates who sneer in the throes of their born-again relativism "What is 'truth'?," appealing to "morality" as a behavior influencer will have as much impact on Congress as a stern talking to by Pope Francis would have on Charlie Sheen. More effective on the morally challenged is likely to be his economic arguments.

Community banks should be putting their capital to work in the small towns, rural communities and middle-class urban enclaves they know well. Instead, they are focusing too many of their precious human resources on onerous paperwork and time-consuming compliance measures.

Community banks are the source of almost 60 percent of all small-business loans of less than $1 million, as well as mortgage and consumer loans tailored to the needs of their local communities. Large banking organizations with more than $50 billion in assets hold almost 40 percent of outstanding small loans to businesses, according to the Federal Reserve, but loans to small businesses aren’t a significant portion of large-bank lending. Small-business loans represent less than 5 percent of the large banks’ total domestic lending.

Cam outlines five specific steps Congress and the federal regulators could take to help community banks (and credit unions, for that matter, although Cam would choke on his own tongue before admitting it). They include:

• Easing up on some of the more onerous residential mortgage lending and servicing rules.
• Eliminating the requirement that community banks report on every new small business loan application.
• Requiring a cost-benefit analysis for all new regulations and prohibiting the issuance of any regulation where the cost exceeds the benefit.
• Raising the threshold to $350 million in assets for the requirement for an audit of a bank's internal controls.
• Eliminating the annual requirement for sending no-change privacy policies.

These are all helpful suggestions, but  I'm frankly surprised that he didn't also call for the carpet bombing of CFPB's D.C. headquarters and insist that Jamie Dimon's king-size bed be short-sheeted. Oh well, the year is not even half over. There's still time to get down to the really important stuff.

Gimme A Break! Nobody Actually Believed Us!

To answer a reader's question, yes, I did get a kick out of the argument by S&P's lawyers (paid subscription required) that statements by S&P "about independence and objectivity are 'puffery' and were never meant to be taken at face value by investors."

Standard & Poor's responded formally on Monday to the civil lawsuit that the Justice Department filed against the company on Feb. 4 in U.S. District Court in Los Angeles.

The federal government says that the rating firm committed fraud when it allegedly misrepresented its ratings as independent and objective.

In its formal defense filed Monday, S&P pointed to two earlier court decisions where judges ruled that such statements by the firm were puffery and therefore can't form the basis for a fraud claim.

[...]

"Even if it's a viable legal argument, it's a pretty unattractive argument for S&P to be putting forward since they're basically in the business of charging clients for their reputation," said Samuel Buell, a law professor at Duke University and a former federal prosecutor. "What they're saying here is, 'When we're talking to investors about our own reputation, we're engaging in meaningless puffery.' "

"That's the whole point of the rating agencies, their seal of approval," Mr. Buell said.

It's hard to argue with Professor Buell about that.

Predictably, this all drove Larry Doyle over the edge.

In conclusion, the statement made by S&P’s lawyer is the equivalent of throwing another log on the fire that is incinerating any sense of meaningful integrity within the Wall Street-Washington conspiracy.

Puff . . . puff . . . up in smoke!

You may want to do the same with any credit ratings that cross your desk from S&P and its industry brethren at Moody’s and Fitch.

As hard as this is to believe, I'm going to say that the provision of Dodd-Frank that requires the regulators to figure out an alternative to the rating agencies is justified, not merely by the facts, but by the damning words flowing from the rating agencies and their mouthpieces. The problem is, thus far, no one has figured out what that alternative might be.

One option on the table is a proposal by Sen. Al Franken (D., Minn.) to create a board that would assign rating firms to rate deals. "As this lawsuit unfolds, it only becomes more clear that the credit rating industry is in need of serious reform, and that the American people and our economy are still at risk as a result of the conflict of interest in the industry," Mr. Franken said in a statement.

Wait a minute: I just agreed with Al Franken. Don't tell anyone. This moment may pass.

Uh, oh. I think Hell just froze over.

Florida Continues To Pummel Stern

Nearly two years ago, we noted that the Florida Bar had filed a complaint against former Florida Foreclosure King David J. Stern over alleged ethical lapses related to the meltdown of his foreclosure mill firm in the wake of a robosigning scandal. The wheels of justice grind exceedingly slowly (at least, they do in The Sunshine State), but last week, the Bar filed another whopper against Stern.

It took two years, but the Florida Bar has finally dropped a doozey of a complaint against former foreclosure king David J. Stern.

The 80-page complaint includes 17 counts or charges that Stern violated the Bar’s rules of professional conduct. The Bar alleges that Stern failed to properly supervise lawyers and non-lawyers at his firm and failed to halt regular violations of Bar rules.

The article summarizes the allegations made in the long complaint. Most have them appear to have been made public previously.

According to the newspaper, neither Stern nor his attorneys could be reached for comment (although another article states that Stern's lawyer, Jeffrey Tew, "told the newspaper Thursday that Stern has done nothing to warrant discipline"). Unfortunately for Stern, a former nemesis was ready and willing to pipe up with an opinion.

Former assistant state attorney general Theresa Edwards, who investigated Stern several years ago before being fired by the AG's office, said she thinks the bar should have acted sooner. (Contacted by the newspaper, the Bar declined, through a spokeswoman, to comment.)

"Considering the amount of money he's made, his bar license will be of little concern to him," said Edwards, who is now in private practice.

Biting off more than you can chew, then trying to gulp it down by cutting corners, appears, in retrospect, to have been a bad business plan. Then again, perhaps Ms. Edwards is correct. Perhaps he's made so much money that he won't care what the state does with his law license.

We'll see. At this rate, it may be another two years before this plays out. By that time, only crackpot bloggers may even remember who Stern was.

The Perils Of Trolling

Last night's post about Tuesday's United Western decision generated an attempt by an "anonymous" troll to leave an abusive comment this morning. I moderate comments, so it didn't make it past the "editor." In addition to some substantial "I hate Kevin" vitriol (some of it scatological), and threats that the regulators (of which the troll intimated he was one) would "get me" for my snark, it contained what I think are outright libelous per se statements regarding the former management of United Western and their outside counsel. The troll used a pseudonym and what I assume to be a phony hotmail account email address. I assume that the troll didn't realize that my blog service captures the unique IP address of all commenters, this IP address being one assigned by Cox Communications to a residence in the Annandale/Falls Church area of the Washington, D.C. suburbs. There's only one location with that assigned IP address, and it won't take more than  a John Doe subpoena to uncover the name of the account holder at that location.

I forwarded the comment and identifying information to United Western's attorneys. I assume that they'll take it from there. I think that it's time to remind the unhinged of the issues I raised in a post in 2007. In addition to other legal (and, if the troll is a lawyer, ethical) violations, the conduct constitutes a federal crime.

Please people: Get a grip. If my blog posts drive you so batty that you feel compelled to engage in illegal anonymous harassment, either seek professional therapy or...here's an idea...don't read this blog.

Adverse Possessor Dispossessed Adversely

When it comes to foreclosing on homes, Bank of America can't seem to catch a break. If they're not seizing the wrong home (and the owner's parrot), some nut job is seizing the right home from them.

In the last few years, some scofflaws have been using "adverse possession" laws as justification for occupying homes that are in foreclosure, have been foreclosed upon, or none of the above. In Boca Raton, Florida, a Gen Y jug-head who calls himself named "Loki Boy" (why not "Loki Man"?), with alleged ties to a fringe anti-government group, tried a variation on this theme and "adversely occupied" for a few months a $2.5 million mansion that was owned by the bank. Although this brazen attempt to violate trespassing laws made national news, those of us in North Texas have been facing a wave of similar attempts. At least we were until the local law enforcement authorities quickly snuffed it out by arresting the "adverse occupiers" and prosecuting them. That nipped this brewing insurrection in the bud. Then again, it's Texas, so we tend to shoot first, ask questions later.

Loki Boy's escapade also ended badly (for Loki Boy), when Bank of America sought (and obtained) an injunction against the Boy and his "house guests." The local police then raided the place, took back possession (with extreme prejudice) from The Boy (who, wisely, was not at home when the fuzz came calling), and restored Bank of America to full possession (no word on how many house guests the bank plans to invite to share the digs). The bank is also suing the Boy for $15,000 in attorneys' fees, but I'm sure B of A wouldn't be surprised if it has a tough time locating Loki, much less collecting that amount from him.

In terms of creating new legal rights, however, you have to give Loki Boy a pat on the back (and perhaps a Thai stick and a fat boy).

The Sun-Sentinel reported that Barbosa posted a notice in the front window of the house naming him as a "living beneficiary to the Divine Estate being superior of commerce and usury." On Facebook, a man named Andre Barbosa calls the property "Templo de Kamisamar."

Man, I haven't seen the "living beneficiary of the Divine Estate" theory pushed since 1967 in Haight Ashbury. At least I think it was in 1967. It might have been 1977. Maybe it wasn't Haight Ashbury. Maybe it was Woodstock. Blast! Those years are a blur to me now. It's as if they've all gone up in smoke.

As for any other potential adverse possessors thinking about floating in Loki Boy's elevated footsteps, Bank of America says "Don't even think about it!"

In a statement issued after the home was secured, a spokeswoman for Bank of America said it appreciated "the assistance of local authorities and the patience of neighbors as we worked to have the trespassers removed.

"We take trespassing seriously, and in the interest of the community, we will take appropriate legal action to protect this and all properties we service," the statement said.

Go ahead Loki Boy wanna-bees: make B of A's day.

Fauxcahontas Hits The Deck Running

Most spanking new US senators have respect for the seniority system that's been in effect in the US Senate since Daniel Webster was making speeches that were actually eloquent. Most new senators tread lightly, with a sense of relative humility ("relative" being the operative word in a joint where the average ego makes Achilles look like Saint Francis of Assisi)and a realization that by storming out of the gate at the sound of the bell they might stumble, break a leg, and be put down. Then again, most US senators aren't a direct descendant of warriors of the Great Plains.

Sen. Elizabeth Warren isn’t wasting time wading into banking policy.

Less than a month into her new job, the Massachusetts Democrat, a new member of the Senate Banking Committee, is seeking information from regulators on why federal bank regulators halted a detailed review of foreclosure files this month.

In a letter sent to the Office of the Comptroller of the Currency and Federal Reserve on Thursday, Ms. Warren and Rep. Elijah Cummings (D., Md.), requested a detailed set of documents related to a foreclosure- review launched by the bank regulators in 2011.

[...]

In their letter, Ms. Warren and Mr. Cummings urged the regulators to provide information on the reviews’ findings – including how much several consulting firms were paid, and any conclusions about how much consumers were harmed.

The review was designed to address banks’ use of so-called robo-signers, a term for employees who signed off on numerous foreclosures and falsely claimed to have reviewed each case. Banks and regulators concluded that it was becoming far too expensive and not compensating homeowners. In recent weeks, regulators have reached agreements with 13 banks, in a pact now worth $9.3 billion.

The lawmakers said they agreed with regulators’ goal of making sure consumers receive aid more quickly. However, they argued that far more information about the settlement agreements should be public.

“Public confidence in the banking system has been badly undermined by a widespread concern that large financial institutions are not held fully to account when they break the rules—and that consumers are not sufficiently compensated,” they wrote.

Although the OCC and Fed refused to publicly comment on the cheeky request of She-Who-Hunts-At-Walmart, my understanding is that, under their breath, the bank regulators were discussing "a pound of sand" or something similar. Perhaps I didn't quite hear them clearly.

I understand why everyone is upset with the robosigning shenanigans, and I've many times blathered on this blog that robosigners deserve to be punished, including being fined and, where perjury has been committed, imprisoned. On the other hand, I'm not sure how the "compensation" argument continues to preoccupy the minds of lovers of The Great Spirit like Liz. I realize that the settlement exacted from the large loan servicers by the bank regulators required "compensation," but that seemed to me to be more of a purely political sop than an attempt to render justice. In a just world, lenders ought to be punished for falsifying documents and borrowers ought to pay their debts. Apparently,  "The Greatest Senator From Massachusetts Since Scott Brown" agrees with many that because of documentation or ministerial deficiencies, borrowers who had defaulted on their loans were "unjustly" foreclosed upon and should have been allowed to stay in their homes without having to cure those defaults, and because they weren't allowed to stay in their homes with the loan terms modified as necessary to accomplish that result, they are entitled to be "compensated."

I predict that over the next six years, Lizzie will inspire much talk of "pounding" and of "sand", most of it in the same declarative sentence.

I knew there was going to be a silver lining to Liz in the Senate. I never expected it to pay off so quickly. I sure hope Barney Frank wins John Carey's vacant seat so whenever blogging topics are ebbing, I can always go to my sure fire daily double.

A Deal Is A Deal

AIG's moment of temporary insanity has passed. It's decided not to join a shareholder lawsuit filed by a company controlled by former AIG CEO Hank Greenberg against the US Government for bailing AIG out in 2008. Actually, Hank's company didn't allege that fact of the bailout was itself wrongful, just that the bailout terms set by the government were wrongful. Everyone understands that when you're going down like a torpedoed garbage scow, you always sue the guys who threw you a life preserver because they didn't reel you in quickly enough and you caught a nasty cold.

AIG's board of directors was apparently worried about reputational risk. Given the bad taste left in the collective mouth of the American public by the Wall Street bailouts, that's probably a justified worry. Politicians of all stripes were publicly uttering variations on the theme of "WTF?" on a daily basis. On the other hand, David Boies (yes, THAT David Boies), the attorney for Greenberg's company (which is the plaintiff in the litigation), thinks that the board's decision was not in the best interests of the shareholders. I assume that's a vague threat of a lawsuit against the directors of AIG. It seems to me that if Greenberg goes that route, he'll first have to win the lawsuit against the government in order to prevail against the directors. I'd think he'd have his hands full on with the suit against the government, without taking on the additional defendants. Then again, I don't swim in that specific shark tank, so I assume my rube-like perceptions and opinions are of little interest to the masters of the universe.

There were some other interesting, and even amusing, observations on AIG's board's decision. The Cato Institute's Mark Calabria astutely observed that big financial institutions rarely sue the federal government "because if they did, the government might not bail them out next time." Rim Shot!

On the other hand, AIG's CEO Robert Benmosche told CNCB that AIG believed that "a deal is a deal." Really, Bob? You danced with the bear and you still said that to a reporter without cracking yourself up? "A deal is a deal" as long as you're not the US government, which believes in honoring its deals unless it's politically expedient to renege on them, in which case it just litigates the resulting lawsuits for a decade or more until the public's interest in the outcome has been long since diverted to one or more other shiny baubles.

I understand the public relations downside as a reason to back off suing the US government. However, the "a deal's a deal" rationale simply doesn't hold water, based upon the nature of the devil with whom the deal was made.

Out With The Old

A year ago, we proposed that the sudden interest of House Ethics Committee Chairman Darrell Issa's interest in pursuing old-hat charges of mischief against certain House members arising out of Countrywide's infamous "Friend of Angelo's" VIP loan program that people like Chris Dodd and Pete Conrad took advantage of, was motivated by pure election year politics. Now that the elections are over, it's hardly surprising that Issa has concluded that there's nothing he can do about the alleged ethics violations, but not because there's no fire beneath the smoke.

The committee said nearly all the allegations of favored treatment involved loans that were granted so long ago that they fell outside the panel's jurisdiction. The committee added, however, that participation in the VIP program did not necessarily mean borrowers received the best loan deal available - and most lawmakers were not even aware they were placed in a VIP unit.

The actions of unnamed House staff members were harshly criticized. Emails indicated they reached out to Countrywide lobbyists for assistance with their personal loans, but those actions also were too old to remain in the committee's jurisdiction. The panel said that if the incidents had been more recent, the staff members could have faced discipline.

In other words, House members' staff were well aware of the benefits of the program and sought preferential treatment, but their bosses were blissfully ignorant. This reminds me of the Soprano's episode where Tony never outright tells Ralph Cifaretto to whack Jackie Aprile, Jr., but artfully words a statement of "support" for whatever decision that Ralphie makes so that Cifaretto knows he's got to put a bullet in the back of the kid's head if he wants to keep inhaling oxygen. Deniability: it's not just for the Mafia.

The use of the statute of limitations rationale as the primary excuse for non-action reinforces the cynic's belief that the modus operandi of Issa, his Democratic predecessor, and all similarly-situated kleptocrats is, when faced with claims of wrongdoing by fellow members of the political class is to putz around for however long it takes to pass the limitations period. By then, most folks will have forgotten completely about the original charges, which is certainly the case with the FOA loans. The only folks with long memories are bloggers with a burr under their saddle.

I find particularly grating the allegation by Issa's committee that there was no evidence that the FOA loan terms were any better than members of Congress could have found elsewhere. So all those members got those particular loans from Countrywide because they liked Countrywide's pretty logo? The criticized staff members "who may have reached out to lobbyists or other government affairs officials at Countrywide for assistance with their personal loans" did so because they all woke up in a Countrywide frame of mind in the morning?

Spare us.

Issa added that his committee found that Countrywide employees viewed their VIP program as a tool to build relationships with those positioned to influence the company's business interests, including government officials.

They hoped to build influence with public officials by offering them loan terms that those officials could have obtained from other lenders. That makes sense, doesn't it?

Applying the theory that when you're being shameless, you might as well give the public The Full Monty, Issa claims that the committee's report is a deterrent to other lenders who might want to set up a loan  program in the future that will attempt to offer politicians the same loan terms that everyone else receives and thereby curry favor with those politicians.

"While short of formally determining a violation, this sends an unmistakable warning to any entity that might try to duplicate Countrywide's lobbying strategy," he said.

Don't worry, Darrell. Only a fictional lender would attempt to duplicate your fictional loan program.

Defending The "Guilty"

In the continuing spirit of the holiday season, I'm deviating from the subject of banking law (and my other favorite topic: bashing politicians) to address a subject near and dear to my heart: the criminal justice system in this country. The following is a repost of an article I wrote a number of years ago for another, more personal, blog, but one I want to repeat, due to some recent discussions with people close to me whose study of our country's legal system seems to have been short-changed by our public school system, as well as by a private university of some distinction. As we are finding out in these difficult times, ignorance is not bliss.

A "blogging buddy" asked me: "I've often wondered how a defense lawyer could defend someone who was guilty, and defend that client with a clear conscience? To me, it's kind of like selling your soul. How do you view it? I know you're supposed to operate on the principal of presumed innocence, but sometimes it's so obvious that the person is, indeed, guilty."

Although I did criminal work early in my career, and I've been a consulting expert to criminal defense teams (as well as to the government) since then, I haven't been a criminal defense attorney in over 34 years. While I have no problem with the question, I may not be the best person to answer it without assistance.

I think Juanita Brooks, a criminal defense attorney at a firm where I was an equity partner "back in the day" (practicing bank regulatory and real estate law, not criminal law), comes very close to my feelings. In an article she wrote for a legal periodical that I have in hard copy but can not find online, she addressed the same topic as follows:  

Confront defense attorney Jaunita Brooks at a cocktail party about how she can, in good conscience, represent guilty people, and her first inclination is to flee.    

"Normally, I walk away and try to engage somebody else in conversation," Brooks says. "But if they won't let me, the honest answer is that I am not the one that makes the judgment about whether the person is guilty or not. My role as a criminal defense lawyer is to keep the system honest. Either a judge or a jury or my client will make the determination (of guilt)."    

Just doing her job. Like her colleagues, Brooks, a partner with McKenna & Cuneo, notes that about 95 percent of all people charged with a crime end up guilty via plea bargaining. (Of the 16,573 felony cases filed by the San Diego District Attorney last year, only 688 went to trial.) So by default, the overwhelming number of clients defense attorneys represent are found guilty of something. The remaining 5 percent, defense attorneys say, have a legitimate need for a trial, with the primary reasons being disagreement over plea bargain offers or belief that the accused is innocent of the charges.

That's the system. It's adversarial. Before the State can deprive a defendant of life, liberty or property (fines and seizures) by virtue of its power to enforce the criminal laws, it must prove the defendant's guilt beyond a reasonable doubt. To do this, the state employs a prosecutor who has, at his or her disposal, the investigative resources of the state, which are considerable, all paid for from the public treasury. The defendant has the right to counsel (and if he cannot afford to retain one, one will be appointed for him by the state). Because the state has the greater resources and the consequences, in a Western society that prizes individual liberty, are so severe, the state has the burden of proof.

As I said, the process is adversarial, and both lawyers have an ethical duty to advocate their client's (state or defendant) position zealously. A judge or a jury makes the determination whether the client is "guilty" or "not guilty." The defense lawyer has a duty to make the state prove its case beyond a reasonable doubt, to attack the holes in the state's case, and to raise every legitimate defense and mitigating fact.

The system doesn't work the way in which it was intended to work if the defense attorney doesn't represent the "potentially guilty" as well as the "potentially not guilty." The "guilty" are separated from the "not guilty" only when the trier of law and fact has made its determination. The attorneys don't make the call. If you want "justice," in the terms of "innocence" and "guilt," human beings can't give it to you. You'd better look to God for that type of "justice." In our society of laws, "the process," functioning as it is intended to function (with all the flaws to which fallible human beings can subject it), is the best form of "justice" a civilized society can construct here on Earth, in my opinion.

I accept this system, which has evolved out of the British common law system, and has been adopted by the U.S. and all of the current and former members of the British Commonwealth. If you feel otherwise, try to change the system to something "better." Obviously, enough citizens feel that, on balance, it provides enough "rough justice" that they refrain from "self-help" (vigilante action), except in isolated instances that are usually, themselves, punished by the system.

I never felt bad about doing the job the system expected me to do and that I agreed to do, which is not to judge "guilt," but to provide the best defense to the prosecution's charges that I can provide. I would have felt worse if I hadn't done my best.

It's rarely that cut and dried, of course, which makes the question more theoretical than realistic. If to a defense attorney a client is "obviously guilty" of the crime with which he or she is charged, that means that the prosecution's unimpeachable evidence is very strong and the defenses are poor. In such a case, the defense attorney will do his or her best to get the most favorable plea bargain for the client, and make a recommendation to the client to accept it. The client makes the final decision, not the attorney.

I don't want to rehash my previous posts (here and elsewhere), because I've covered this same ground previously. Suffice it to say that I can't see how it would bother a defense attorney to defend a client who "obviously" (to the defense attorney) committed a crime. To not defend the client would be standing the system on its head. If it bothers you, don't be a criminal defense attorney. Do something else for a living.

Like offering counseling to an obviously evil person, for example. I just don't know how a person could do that. :-)

"I was once asked by a minister, 'How can you represent guilty people?'" says Carmela Simoncini of Appellate Defenders Inc. "I asked him, 'How can you preach to sinners?'"

TARP Profits Continue To Grow

Back in February, I noted that TARP had yielded a profit for the US Treasury of $20 billion. Notwithstanding the fact that the program is now down to the "harder-to-exit" smaller banks that might not be as attractive to potential purchasers of the preferred stock that the Treasury still holds, the profit figure is now up to $23 billion. While that's a drop in an ocean of federal debt, it's nothing to sneeze at. What I said earlier, I'll say again:

Opponents of the original TARP will never admit that they might have been wrong about the need for the program to save the economy from ruin. The fact that the Treasury has already made a profit on its original TARP investments ($20 billion so far, according to the linked article) is meaningless to them. I guess they wanted to let the "creative destructive" forces of a "pure market system" work their magic on all of us, and if we ended up standing in bread lines, they'd say that was a hard lesson learned and that we're all the better for it. I don't have the energy to tell them that not only is God dead, but so is Ayn Rand.

Even if the remaining $8 billion is written off (it won't be), the program still ends up in the black. Not bad for a much-maligned "bailout."

Of course, the Treasury may have a problem getting potential investors to pay as much as they might have in future TARP stock auctions now that one bank has stiffed an investor on TARP stock dividends (paid subscription required). The fact that those dividends are noncumulative makes it risky when small banks decide that, while it was their patriotic to pay the US Treasury, it's perfectly fine not to pay investors who bought their TARP stock from the Treasury Department.

"This is a good lesson as to what risks buyers need to be aware of with small banks," said Doug Faucette, a lawyer at Locke Lord. "That's why they call it stock."

I think that's an astute observation. However, I wish that bank the best of luck if it ever finds itself in need of capital from private equity investors in the future. PE hates it when Main Street starts acting just like Wall Street.