Newspaper article THE JOURNAL RECORD

Edwards: Comptroller Punishes Oklahoma in First City Closing

Newspaper article THE JOURNAL RECORD

Edwards: Comptroller Punishes Oklahoma in First City Closing

Article excerpt

The Comptroller of the Currency is punishing Oklahoma for the embarrassment of the 1982 Penn Square Bank failure by its subsequent "hasty" closing of First City Bank of Oklahoma City on June 21, Rep. Mickey Edwards, R-Okla., said Tuesday.

"In my opinion, First City Bank wouldn't have had to close," Edwards told a public meeting at the Edmond Sheraton Hotel.

Edwards believes that First City Bank could have been given an "extra week" to develop new assets and resources. Or the Comptrollers office could have sent in a new team of auditors to see if loans classified as "doubtful or lost" could have been recovered, he said.

Citing a "real serious need to make the bank regulators accountable," Edwards claimed:

"This is not happening in other states."

A U.S. General Accounting Office audit focusing on the Federal Deposit Insurance Corp. (FDIC) liquidation of Penn Square Bank, requested by Edwards and Sen. David Boren, D-Okla., should be completed within 30 days, Edwards said.

Bills introduced by the two Oklahomans, requiring the FDIC to submit to Congress a monthly itemized list detailing all bank liquidation expenses, are pending in congressional committees, he added.

The proposals stipulate none of the funds needed to compile the reports would be charged against the assets of the bank being liquidated.

In addition, the measure prioritizes the order in which insured and uninsured depositors, creditors and stockholders would be paid off.

Edwards and Boren have been critical of the FDIC decision to leave unprotected some 972 depositors who had $194 million in uninsured deposits in Penn Square Bank when it failed in July, 1982.

First City Bank, which was closed and declared insolvent by the Comptroller of the Currency on June 21st, was reopened June 24th as City Bank & Trust Co.

An FDIC spokesman blamed the failure on "basically inept management" and a weak loan portfolio, resulting in $7 million in loan losses. …

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