21st Century Adaptation of Neil Bush Silverado Scandal?
"One thing is for sure, Neil Bush was one of those insiders. Good and Walters never repaid a dime of their loans, and in 1988 Silverado collapsed. The main reason cited for its demise was their failure to repay the $132 million.
"According to Stephen Pizzo in Mother Jones on September 1, 1992, "After almost two years of hand-wringing had passed, an expert hired by regulators declared that Neil suffered from an “ethical disability, and he was required to pay a $50,000 fine for his ethical lapses at Silverado." The deal was so good that Neil decided to drop his appeal of the case. As usual, family friends' raised money to pay the $50,000 fine.
"While five other Silverado directors were barred from working for any federally insured institution for life, Neil was only ordered to "desist from any acts, omissions or practices involving any conflicts of interest, unsafe or unsound practices or breaches of fiduciary duty." In other words, quit being a crook. Big deal.
"Another interesting aside to the story is how the public closure of Silverado was delayed until after the 1988 election. Shortly before the event, when regulators wanted to close the doors, a call from Washington delayed the closing for 45 days which meant the public would not learn about its newly acquired $1.3 billion debt until after Bush won.
"So the question remains, how did Neil manage to stay out of jail after regulators determined that his conduct “involved significant conflicts of interest and constituted multiple breaches of his fiduciary duties? The answer to that question involves a story within a story, and one cover-up covered-up by a second."
"That 45 days extension cost taxpayers a bundle. According to Wilmsen, the cost of that delay is in the hundreds of millions of dollars. In late September, regulators estimated the cost of Silverado's closure to be between $400 million and $600 million. When the thrift was finally closed December 9, it cost $1 billion. (p 184)
"In the end, Bush was able to block every attempt to hold Neil responsible for his actions."
Now comes the McCain Junior saga courtesy of Mark Nickolas at Political Base via Raw Story: "Big developments this afternoon concerning Silver State Bancorp -- the bank from whichAndrew McCain (son of John McCain) suddenly resigned from its board of directors a week ago for "personal reasons." Last night, I updated this story as neither McCain nor the bank have been willing to publicly discuss the reasons for his departure.
"Well, today there's been additional high-ranking resignations:
Silver State Bancorp today announced the resignation of Corey L. Johnson as President and Chief Executive Officer of the Company and as Chief Executive Officer of Silver State Bank, the Company's wholly-owned bank subsidiary. The Company also announced the resignation of Silver State Bancorp's and Silver State Bank's Chairman of the Board, Bryan S. Norby.
"The bank also reported devastating second quarter losses, significantly steeper than were anticipated:
Silver State Bancorp today reported a net loss for the quarter ended June 30, 2008 of $62.7 million, or ($4.15) per diluted share, compared with net income of $6.2 million, or $0.44 per diluted share, reported for the second quarter of 2007.
The loss for the quarter is the direct result of a $58.6 million provision to the Company's loan loss reserve, an impairment charge of $18.8 million representing a full write-down of the Company's goodwill asset, and the establishment of a valuation allowance of $7.1 million to the Company's net deferred tax assets.
"Analysts were expecting only a $0.54 per share loss, not the $4.15 per share loss that it reported.
"A couple of things to keep in mind.
"McCain served on the board (and the Audit Committee) for the entirety of this quarter. He joined the bank on April 1st -- following its merger with Choice Bank where he had served as director since 2006 -- and served through the quarter ending June 30th. He suddenly resigned at the end of last week with the wires only reporting it on Saturday morning.
"And it was during this quarter that the financial wheels came off this bank's cart, as its financial disclosures shows, and McCain served on the bank's Audit Committee the entire quarter.
"As I noted last night, Silver State will be holding a conference call on Monday morning at 9:00 am ET "to discuss the Company's performance and second quarter results." They'll no doubt be asked about the circumstances of McCain's sudden departure and the obvious implosion of this bank. I'm looking forward to joining that call and I sure hope the national media starts to ask questions about this small piece of our national banking crisis that involves the son of the Republican presidential candidate..."
Deju vu all over again? We'll see.
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