Tag Archives: FDIC

Republic First Bank tanks; Fulton Bank will acquire it

Republic-Bank

Important Takeaways:

  • Philadelphia-based Republic First Bank (doing business as Republic Bank) was closed today by the Pennsylvania Department of Banking and Securities, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect depositors, the FDIC entered into an agreement with Fulton Bank, National Association of Lancaster, Pennsylvania to assume substantially all of the deposits and purchase substantially all of the assets of Republic Bank.
  • Republic Bank’s 32 branches in New Jersey, Pennsylvania and New York will reopen as branches of Fulton Bank on Saturday (for branches with normal Saturday hours) or on Monday during normal business hours. This evening and over the weekend, depositors of Republic Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on Republic Bank will continue to be processed and loan customers should continue to make their payments as usual.
  • As of January 31, 2024, Republic Bank had approximately $6 billion in total assets and $4 billion in total deposits. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) related to the failure of Republic Bank will be $667 million. The FDIC determined that compared to other alternatives, Fulton Bank’s acquisition of Republic Bank is the least costly resolution for the DIF, an insurance fund created by Congress in 1933 and managed by the FDIC to protect the deposits at the nation’s banks.  Republic Bank is the first U.S. bank failure this year; the last failure was Citizens Bank, Sac City, Iowa on November 3, 2023.

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When a bank fails, the government is going to arrange for it to be absorbed by a bigger bank if possible

Important Takeaways:

  • Bank failure: Kansas Heartland Tri-State Bank closed by FDIC
  • Heartland Tri-State Bank of Elkhart, Kansas, failed on Friday, with the Federal Deposit Insurance Corporation taking control.
  • The FDIC agreed to assume all the deposits of Heartland Tri-State Bank to protect customers, entering a purchase and assumption agreement with Dream First Bank of Syracuse, Kansas.
  • That means the four branches of Heartland Tri-State Bank will reopen as branches of Dream First Bank on Monday.

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The top contenders to run Biden’s financial agencies

By Pete Schroeder, Michelle Price and Katanga Johnson

WASHINGTON (Reuters) – Democratic U.S. President-elect Joe Biden’s team has tapped a mix of progressives and centrist policy experts, including former derivatives market regulator Gary Gensler, to work on a transition plan for financial industry oversight.

Here is how staffing could shake out at some of the key financial regulators, according to nearly two dozen lobbyists, officials and policy experts in Democratic circles.

CONSUMER FINANCIAL PROTECTION BUREAU (CFPB)

The CFPB director is a critical role for progressives such as Senator Elizabeth Warren who believe the agency can help tackle wealth inequality and racial injustice. A June Supreme Court ruling handed Biden the power to fire Republican President Donald Trump’s CFPB director, Kathy Kraninger, and many policy experts expect him to quickly replace her after he takes office on Jan. 20.

Potential candidates for the role include Warren’s protégée, U.S. Representative Katie Porter; Federal Trade Commissioner Rohit Chopra; Bharat Ramamurti, Warren’s former aide who sits on a pandemic congressional oversight panel; and Patrice Ficklin, the CFPB’s fair lending director who has been at the agency since its inception in 2011.

SECURITIES AND EXCHANGE COMMISSION (SEC)

Biden is also expected to quickly staff up the SEC, which under Chair Jay Clayton, a Trump appointee, has pursued many rule changes opposed by Democrats and investor advocates.

Clayton, whose role is based in Washington, has said he wants to return home to New York and is expected to resign well before his term ends in June. That would position senior Democratic SEC Commissioner Allison Lee as acting chair until a new chair is sworn in.

Progressives are keen on former Democratic SEC Commissioner Kara Stein for chair, although Rob Jackson, also a former Democratic commissioner who currently teaches at New York University School of Law, is preferred by moderates. Gensler is also a contender, the sources said.

BANKING REGULATORS

There will be a handful of banking regulator roles to fill, with the first likely to be comptroller of the currency. That is because current Comptroller Brian Brooks is serving in an acting capacity, allowing Biden to replace him quickly. Amy Friend, formerly senior deputy comptroller and chief counsel at the agency under Obama, is seen as a leading candidate.

Federal Deposit Insurance Corporation (FDIC) Chair Jelena McWilliams cannot be removed by Biden and has said she wants to serve out her term, which ends in 2023. But Biden can still tilt the agency’s five-seat board, which passes rules via majority vote, by quickly appointing the heads of the CFPB and Office of the Comptroller of the Currency who always hold seats on the FDIC board too. Obama-era holdover and former FDIC Chair Martin Gruenberg already has a seat.

If McWilliams resigns, Michael Barr, professor at the University of Michigan Law School and former Obama administration Treasury official is seen as a contender for that or another banking slot, as is Graham Steele, a director at the Stanford Graduate School of Business and former Federal Reserve staffer. Barr is advising the transition team.

COMMODITY FUTURES TRADING COMMISSION (CFTC)

Current Republican CFTC Chair Heath Tarbert is expected to resign from the chairman’s role, putting senior Democratic Commissioner Rostin Behnam in line for acting chair. But the sources said Dan Berkovitz, the other Democratic CFTC commissioner and formerly general counsel to Gensler when he led the agency, is the front-runner for the permanent chairman’s role.

FEDERAL HOUSING FINANCE AGENCY (FHFA)

The FHFA is led by libertarian Mark Calabria who has said he is committed to overhauling the country’s housing finance market before his term ends in 2024. He is unlikely to resign, the sources said, and cannot currently be fired. That could change, however, pending a Supreme Court challenge to the agency’s structure, which could find the director can be removed.

If so, Biden, for whom affordable housing is a key policy, is likely to replace him. Potential contenders for his job include Eric Stein, who was special adviser to Democratic FHFA Director Mel Watt from 2014 to 2019, and Diane Yentel, chief executive of the National Low Income Housing Coalition. Stein is also advising the transition team.

All those named above, or their representatives, declined to comment or did not respond to requests for comment, other than Ficklin and Clayton. While Ficklin would not comment on whether she was in contention for a role, she said she would be honored to serve. A spokeswoman for Clayton said there are a number of items on his agenda “that he intends to move forward in the upcoming months.”

(Reporting by Michelle Price, Pete Schroeder and Katanga Johnson; Editing by Peter Cooney and Alistair Bell)

Likely hack of U.S. banking regulator by China covered up: probe

Mouse with Chinese flag projection

By Jason Lange and Dustin Volz

WASHINGTON (Reuters) – The Chinese government likely hacked computers at the Federal Deposit Insurance Corporation in 2010, 2011 and 2013 and employees at the U.S. banking regulator covered up the intrusions, according to a congressional report on Wednesday.

The report cited an internal FDIC investigation as identifying Beijing as the likely perpetrator of the attacks, which the probe said were covered up to protect the job of FDIC Chairman Martin Gruenberg, who was nominated for his post in 2011.

“The committee’s interim report sheds light on the FDIC’s lax cyber security efforts,” said Lamar Smith, a Republican representative from Texas who chairs the House of Representatives Committee on Science, Space and Technology.

“The FDIC’s intent to evade congressional oversight is a serious offense.”

The report was released amid growing concern about the vulnerability of the international banking system to hackers and the latest example of how deeply Washington believes Beijing has penetrated U.S. government computers.

The report did not provide specific evidence that China was behind the hack.

Shane Shook, a cyber security expert who has helped investigate some of the breaches uncovered to date, said he did not see convincing evidence in the report that the Chinese government was behind the FDIC hack.

“As with all government agencies, there are management issues stemming from leadership ignorance of technology oversight,” Shook said.

Speaking in Beijing, Chinese Foreign Ministry spokesman Lu Kang repeated that China opposed hacking and acted against it.

People should provide evidence for their accusations and not wave around speculative words like “maybe” and “perhaps”, he told reporters.

“This is extremely irresponsible.”

The FDIC, a major U.S. banking regulator which keeps confidential data on America’s biggest banks, declined to comment. Gruenberg is scheduled to testify on Thursday before the committee on the regulator’s cyber security practices.

Washington has accused China of hacking computers at a range of federal agencies in recent years, including the theft of more than 21 million background check records from the federal Office of Personnel Management beginning in 2014.

WATCHDOG MEMO

The compromise of the FDIC computers by a foreign government had been previously reported in May and some lawmakers had mentioned China as a possible suspect, but the report on Wednesday for the first time cited a 2013 memo by the FDIC’s inspector general, an internal watchdog, as pointing toward China.

“Even the former Chairwoman’s computer had been hacked by a foreign government, likely the Chinese,” the congressional report said, referring to Gruenberg’s predecessor, Sheila Bair, who headed the FDIC from 2006 until 2011 when Gruenberg took over as acting chairman.

Bair could not be immediately reached for comment.

A redacted copy of the 2013 FDIC inspector general’s memo seen by Reuters said investigators were unable to determine exactly which files had been extracted from agency computers.

But a source familiar with the FDIC’s internal investigation said the areas of the regulator’s network that were hacked suggested the intruders were seeking “economic intelligence.”

In all, hackers compromised 12 FDIC workstations, including those of other executives such as the regulator’s former chief of staff and former general counsel, and 10 servers, the congressional report said.

It accused the FDIC of trying to cover up the hacks so as not to endanger the congressional approval of Gruenberg, who was nominated by President Barack Obama and confirmed by the U.S. Senate in November 2012.

A witness interviewed by congressional staff said the FDIC’s current head of its technology division, Russ Pittman, instructed employees not to disclose information about the foreign government’s hack, the report said.

The witness said the hush order was to “avoid effecting the outcome of Chairman Gruenberg’s confirmation,” according to the report. Pittman could not immediately be contacted for comment.

The report also provided details of data breaches in which FDIC employees leaving the regulator took sensitive documents with them. It said current FDIC officials have purposely concealed information about breaches that had been requested by Congress.

U.S. intelligence officials believe Beijing has decreased its hacking activity since signing a pledge with Washington last September to refrain from breaking into computer systems for the purposes of commercial espionage.

At the same time, Obama has acknowledged difficulties in keeping government information secure. In addition, Republican opponents have said that Democratic presidential candidate Hillary Clinton’s use of a private email server when she was secretary of state could have exposed classified information to foreign governments.

(Reporting by Jason Lange and Dustin Volz; Additional reporting by Jim Finkle in Boston, and Ben Blanchard in BEIJING; Editing by Grant McCool)