Category: bank failures

Biggest bank failure since the S&L crisis

No, not Countrywide but a significant demise nonetheless. I’m talking about Netbank, the $2.5 billion online bank in Alpharetta, Georgia which received notice from the FDIC last week.

Netherlands-based ING Bank, part of financial giant ING Groep, will assume $1.5 billion of NetBank’s insured deposits and its customers will automatically be transferred to ING. ING will also acquire $724 million in assets.

Can you guess the catalyst?

NetBank sustained significant losses last year “primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies,” the Office of Thrift Supervision said in a statement.

My comment: Note to Treasury Secretary Hank Paulson: The credit contagion is spreading like wild fire.

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