Causes of Bank Failure - 6382 Words

WHY BANK FAILS Introduction Banks are the safest place to keep your cash. Nevertheless, bank failures happen from time to time. Here s a look at what causes bank failures and what you can do about them. The main thing to know in a bank failure is that your money is probably safe. If your money is FDIC insured, you probably don’t need to panic. Bank Officers’ Fraud Let us have an example from USA Former TBW CEO Pleads Guilty in $1.5 Billion Bank Fraud Scheme WASHINGTON—Paul Allen, the former chief executive officer (CEO) at Taylor, Bean Whitaker (TBW), pleaded guilty today to making false statements and conspiring to commit bank and wire fraud for his role in a $1.5 billion fraud scheme that contributed to the failure of†¦show more content†¦Colonial Bank never received any TARP funds. In court today, Allen also admitted to making false statements in a letter he sent to the U.S. Department of Housing and Urban Development, through Ginnie Mae, regarding TBW’s audited financial statements for the fiscal year ending on March 31, 2009. In this letter, Allen omitted that the delay in submitting the financial data was attributed to concerns its independent auditor had raised about the financing relationship between TBW and Colonial Bank. Instead, Allen falsely attributed the delay to a new acquisition and TBW’s switch to a compressed 11-month fiscal year. To date, five other individuals have pleaded guilty for their roles in this and related fraud schemes. The case is being prosecuted by Deputy Chief Patrick Stokes and Trial Attorney Robert Zink of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Connolly and Paul Nathanson of the Eastern District of Virginia. This case was investigated by SIGTARP, the FBI’s Washington Field Office, FDIC-OIG, HUD-OIG, FHFA-OIG, and the IRS Criminal Investigation. The Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury also provided support in the investigation. This prosecution was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage anShow MoreRelatedThe Great Depression Of 19291049 Words   |  5 Pagesdecreasing and people were unable to sell out their stocks. Which cause the Bank Failure, people want to take their saving out from the banks, but the banks were unable to give back their money about 9,000 banks failed in the 1930s(Martin 1). The unemployment rate keeps rising, people who did not have a job were worried about their saving, afraid to waste their money on goods become very careful on the use of money on goods. This cause the Reduction in Purchasing some business failed. The disaster didRead More Monetary Policy During The Great Depression Essay example1389 Words   |  6 PagesOne of the most important aspects of the Great Depression that stands out in economists’ minds is the sur ge of bank panics and failures during the depression’s onset (1930-1933). However, an institution created with the intention of preventing such a string of disasters failed to fulfill its obligation as a â€Å"lender of last resort.† This is the Fed, and its failure to prevent the early bank panics of the Great Depression is a very interesting economic issue. So why did the Fed fail to fulfill itsRead MoreThe Crisis Of The United States1305 Words   |  6 Pagesinstitutions. Just to name a few of the acquisitions and failures that occurred due to the crisis, Lehman Brothers, Merrill Lynch and Bear Stearns were among the largest investment banks. â€Å"Lehman Brothers declared bankruptcy, Bear Stearns was bought by JP Morgan Chase and Merrill Lynch was bought by Bank of America.† (Chang, 14) Bank of America also purchased Countrywide Financial, which issued approximately 17% of all mortgages in the U.S. market. Some bank holding companies that were greatly affected wereRead MoreIncrease in the Significant Role in Compliance in Financial Service Firms727 Words   |  3 Pagesrisks arising from failure to comply regulations and non-compliance in the financial institutions. Compliance plays an essential role to mitigate risk and protect the business from regulatory fault. Basel Committee on Banking Supervision (2005) defines compliance as an independent function that identifies, assesses, advises on, monitors and reports on the bank’s compliance risk, that is, the risk of legal or regulatory sanctions, financial loss, or loss to reputation a bank may suffer as a resultRead MoreThe Great Depression Of The 1930s Essay1689 Words   |  7 Pagesis important to look at the causes of the bubbles, scale of economic crisis’s, and the economic effects to identify similarities and differences between to the two crisis’, because it helps gather a firm understanding and better prepare us for a future crisis. Causes The Great Depression In America, the Great Depression is one of the defining moments in U.S history. The cause of the Great Depression is complex and due to many unfortunate factors, the most notable cause being the stock market crashRead MoreThe Major Causes And Contributions Of The Great Depression1536 Words   |  7 Pagesthis severe economic crisis such as the overproduction of crops and technologies, installment plans, stock speculation through buying on margin, bank failures, and the Dust Bowl. The Depression created endless hardships for many Americans, facing unemployment or low wages and consumer debt. The economy today, still encounters speculation, bank failures, and natural disasters. Overproduction occurred long before the Great Depression. During World War â…  , the United States demanded more agriculturalRead MoreThe Success Of The Great Recession1375 Words   |  6 PagesDepression which took place during the 1930s. The causes of both crises can be said to be similar as both lie in the actions of the federal government. While the crash of the stock market in 1929 is said to be one of the major causes and sometimes even the main cause of the Great Depression, there are also other circumstances that led to this economic crisis. Bank failures during the 1930s also added to decline in the economy. The failure of hundreds of banks caused people to lose their savings and businessesRead MoreRecession and Resulting Banking Failures1071 Words   |  4 Pagesthe 2008 Recession and Resulting Banking Failures Executive Summary The financial crisis of 2008, which caused the most damage in world economies between the years 2007 and 2009, has a long list of potential culprits that helped to initiate the crisis. The global economy has become so entangled that it is isolate a specific first cause or be able to point the blame at any one group in isolation. However, economists now have a whole range of specific causes in which they attribute to the crisis,Read MoreSome Causes of the Credit Crunch Essay979 Words   |  4 Pageshappens during recession. It is important to find out the reasons. Some of the reasons for it are †¢ Decrease in bank capital: After a recession situation banks are not able to match the demand. The demand for loans rises. During the recession period banks incur loss. As a result they are not able to lend in the same way. So, when the demand peaks, banks are not able to generate it. This causes deficiency. It gives arise to a situation where â€Å"not only does the bank’s capital fall but the minimum capitalRead MoreThe Stock Market Crash Of 19291437 Words   |  6 Pagescertain that even many companies placed money in the stock market. In addition, even more problematic, some banks placed their customers money in the stock market (without their consent). With the stock market prices rising, everything seemed fantastic. Many believe incorrectly that the stock market crash of 1929 is the same as the Great Depression when in fact; it was one of the major causes that led to the Great Depression. At first, there was no massive drop. Stock prices began to fluctuate in