Today AmTrust Financial Corporation (parent of AmTrust Bank) has filed for bankruptcy protection. The filing does not include the retail banking operations. However it needs to be known that the FDIC has been seeking a buyer for the retail banking operations of AmTrust Bank.
From all appearances it would seem that AmTrust Bank will likely end up under FDIC receivership.
AmTrust Financial Corp., the owner of a Cleveland thrift clobbered by losses and shrinking capital, filed for bankruptcy protection amid a push by federal regulators to find a buyer for the thrift, according to people familiar with the situation.
Monday’s filing in U.S. Bankruptcy Court in Cleveland didn’t include AmTrust Bank, which has about $11.7 billion in assets and 66 branches but posted a net loss of $269.9 million in the third quarter. The banking unit is considered undercapitalized by regulators as a result of the housing crisis, which battered areas such as Arizona and Florida where AmTrust was an aggressive mortgage lender.
In an affidavit filed with the court, AmTrust Chief Executive Peter Goldberg said the recession has “severely impacted” the parent company because of its “significant investments” in residential mortgages and loans for construction and land development. The company decided to seek Chapter 11 protection from creditors despite having “diligently attempted to survive the downturn in the economy,” he said in the court filing. [...]
[...] The Federal Deposit Insurance Corp. has been conducting an auction for AmTrust Bank, and bids were due last Wednesday, according to people familiar with the matter. The auction process could result in AmTrust’s seizure by the Office of Thrift Supervision. In that scenario, AmTrust would be sold by the FDIC to another financial institution.[...]
[...]As AmTrust Bank’s real-estate troubles deepened, the FDIC began contacting rivals earlier this year to gauge their interest in taking over the thrift, according to people familiar with the matter. Regulators subsequently agreed to give AmTrust executives more time to try to stabilize the institution.
If AmTrust is seized, it would be the fifth-largest U.S. bank failure based on assets out of 124 so far this year[...] (source: WSJ , h/t Butch)
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AmTrust Bank was in trouble long before the financial meltdown. AmTrust Bank had established an unethcal behavior of not following the rules of safe and sound banking practices. For this bank to tell us that it was the economy would not be telling the whole story. The financial meltdown only magnified the aberrant mortgage lending activities and violations of federal rules,laws and regulations by the banks management. The other piece of this story is the failure of their federal regulator, The Office of Thrift Supervision to perform their legal responsibilities in administering,supervising,regulating and enforecement of violations as required under Title 12 (Banks and Banking).
It would appear that the OTS has made malfeasance an art form.
The management of this bank bought this on themselves and only has to look in a mirror to see who was responsible.