Newspaper article THE JOURNAL RECORD

Bank Closing Systems Developed from State

Newspaper article THE JOURNAL RECORD

Bank Closing Systems Developed from State

Article excerpt

When Paul Heafy came to Oklahoma to help close Penn Square Bank in 1982, he thought he would be here a short time and then move on to another state, another bank liquidation.

He didn't know that more than seven years and 105 bank closings later he would still be in Oklahoma - where he would eventually head the Federal Deposit Insurance Corp.'s liquidation division, leading a staff that would develop systems used nationwide for closing banks.

``In 1984, Oklahoma was definitely one of the places where banks closed more than anywhere else,'' said Heafy, who recently resigned as head of the liquidation division of the FDIC's Oklahoma office to start his own related business in Oklahoma City.

The trials of the FDIC during Heafy's time were a symbol of the biggest story f the 1980s in Oklahoma - the boom and bust of the state's economy. Oil prices dipped, property values plummeted and farmers faced financial ruin - all factors that pushed banks into insolvency and created work for liquidators.

At one point, T-shirts were sold with the slogan ``Oklahoma, home of the FDIC.''

When Penn Square failed in 1982, the FDIC's liquidation office in Oklahoma went instantly from zero employees to 400.

The staff shrunk to 125, and then grew again to a peak of more than 600 in 1984, Heafy said. The Oklahoma City office had a payroll of $16 million, and at one point, controlled $2 billion in assets

``When we first started going out on closings,I was the only person. . .that had ever been on a bank closing before,'' Heafy said.

Now many of the liquidators in Oklahoma have been to 20 or 30 closings. That's more experience than most liquidators would have obtained in a career before the oil boom. …

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