Monday, January 26, 2009

First Fed

Calculated Risk broke the news this evening that First Federal Financial Corp. announced layoffs and an Order to Cease and Desist by the Office of Thrift Supervision.

A reader requested, "Please guys - I know the community will have things to say and the comments on Calc risk were absolute drivel." Comments here are open....

4 comments:

WarChestSM said...

This was where the WarChest began in its infancy...I remember as a little kid seeing a few celebs in the branch that I went to as well.

Fast forward to about a year and a half ago and I began looking through their 10-k and 10-q forms to investigate the "negative amortization" issue that the crazy bubble bloggers were screaming about. Also remember looking at Wachovia.

I just didn't understand how all these banks weren't doomed...I mean, they were booking phantom interest as revenue (and subsequent profit) and here I was figuring that a lot of these loans wouldn't pay off and that all the interest would have to be charged off.

I remember seeing FED do well after their quarterly earnings announcement a quarter or two ago. I believe management was insistent that they stopped their "aggressive" lending practices much earlier than most. That may be true (or it might not), but it looks like the chickens are coming home to roost regardless.

I also remember a little while ago that they officially moved headquarters from SM to somewhere just south of here.

Overall, I was giving them 50/50 odds of survival before this announcement...now it doesn't look so good (duh!).

dlp said...

I, too, remember my first passbook coming from First Federal some 35 or more years ago. This was my neighborhood bank where I could put my earnings from watering the neighbors lawn or babysitting or, as I did my last year in high school, working at the local library to save my money to go to Europe after I graduated. Now my mother is begging me to tell her whether she should pull her money out - its less than the FDIC limits -- but her CDs don't mature until the end of February and I don't know whether the penalties are worth avoiding the hassle. Does anyone know what the end result was for IndyMac? I read a lot of people had a tough time at first - does anyone know how it all panned out? While I have been expecting this to happen for some time, and like most everyone have suffered losses to certain degree by the downturn, this one really hurts. What ARE things going to look like when we finally hit bottom?

Anonymous said...

No reason to take your money out. It is protected by the FDIC. A new bank will buy the deposits, change the sign out front, and everything proceeds as normal for depositors.

This is exactly what needs to happen to Citigroup and Bank of America. Continuing to prop up insolvent institutions is what the Japanese did and led to their lost decade.

Richard Mason said...

I think all the people who "had a tough time" at IndyMac exceeded the FDIC limit (or there was debate over whether the account was a joint account thus increasing the limit or not).

If your mother does not exceed the $250,000 limit, she should be fine.