First Bank Failure in Years

During the 80's bank failures were nearly an every day occurrence as savings and loans dropped like flies. It's become a lot less common as banks have consolidated and oversight improved, but in Pittsburgh, they've had the first bank failure in several years:

After nearly 21/2 years without a bank failure, a small Pennsylvania bank collapsed this month.

Metropolitan Savings Bank of Pittsburgh was closed by its state banking department. About $12 million in deposits were assumed by Allegheny Valley Bank of Pittsburgh.

The Federal Deposit Insurance Corp. said Metropolitan had about $1.2 million in deposits in 70 accounts that could exceed the federal insurance limit.

The last bank failure occurred in June 2004, the longest period without a failure since the FDIC was formed in 1934.

I've actually had some experience with this. In April of 1985 I was working for Beverly Hills Savings which got itself into deep trouble due to fraudulent loans and generally risky lending practices. Late one Tuesday afternoon the regulators came marching out of the parking garage two-by-two with briefcases in hand and took over the institution. At that time there were so many failures that the government didn't have the funds to just shut them all down and pay off the depositors. Instead, they created management program in which our bank was managed by another as they tried work out the problems. The government took on the bad loans, which eventually totalled around $1 billion dollars.

The company that took us on under the management contract also went bust a few years later (after the management contract had ended), but thanks to that management program, I had a job 10 years longer than I should have because the bank was eventually sold to a big midwest bank and continued to survive until the California unit was sold again in 1995.

The government ate hundreds of billions of dollars because of failed S&L's, but it didn't work out that bad for me.