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The Chairman of the Richards College of Business’ Economic Department does not expect that the FDIC will slow down on filing civil suits against failed-banks anytime soon.
The FDIC filed their 15th civil suit against a Georgia bank last Friday, requesting a pay-out of 29.9-million dollars from former-insiders with the First National Bank of Georgia in Carrollton.
Dr. David Boldt explains what could be behind the FDIC filings:
“Every time that a bank is closed, the FDIC has to get another bank to take it over,” Boldt said Tuesday. “To take over the assets, they have to… in a sense, sweeten the pot—put money into it to get a bank to take it over. And, what they are trying to do is recoup some of those funds wherever they can to replenish the FDIC trust fund.”
Boldt would not speculate on how successful this strategy might be.
On a positive note, Boldt says the rate of bank foreclosures in Georgia now is a “trickle” compared to what it was between 2008 and 2011.
“The banking sector has clearly stabilized,” he said. “It really does help that you are starting to see home prices… they have clearly bottomed out—they are starting to rise a little bit and the economy is rising… a bit, and that is really helping things.”
Georgia leads the nation in bank failures since mid-2008.