I thought that if and when the moment came I would be sad. Resigned. Depressed. And yet when the news really sank in Saturday morning, I became furious. Raging. Apoplectic. Park National Bank and its parent corporation, First Bank of Oak Park Corp., had been shut down by the Federal Deposit Insurance Corp. Regulators swooped in Friday night and branches were re-opened Saturday under the U.S. Bank flag. FDIC officials and U.S. Bank employees were on hand to calm fears, answer questions and put on a good front for customers and bank staff alike.
The largest privately held banking group in the nation, the best community bank operation around, had been taken over. And more than $2.5 billion of taxpayer money is now at risk in support of one of the nation's largest banks as they swallowed whole an operation that was shut down not by bad lending, not upper-management malfeasance, not employee theft, nor by any Ponzi scheme. No, FBOP Corp. was felled by its investments in quasi-governmental Fannie Mae and Freddie Mac. The common banking industry practice of investing short-term assets, 30- or 60-day money in Fannie and Freddie, lost FBOP the majority of its capital base virtually overnight and allowed the government to claim the bank was seriously undercapitalized.
While the nation's largest banks were allowed almost unfettered access to TARP (Troubled Asset Relief Program) funds to cover greed and mismanagement that ran rampant through their organizations, FBOP Corp. was denied these funds. Denied when their sin was not one of their own making, as could be argued was the case with Bank of America, with Citibank, with Wells Fargo. Even U.S. Bank, FBOP's new owner, took TARP money for God's sake (They were persuaded to and quickly repaid it). Most banks fail because they overreached and imprudently lent money that caused their own downfall. That was not the case here.
Where was the proper government oversight in Fannie and Freddie? Why no bailout for banks who lent money to Fannie and Freddie as short-term investments and saw these assets frozen? Why were the nation's largest banks allowed to appropriate your money and mine to save their sorry behinds? Why wasn't the same opportunity available to FBOP Corp.? And why wouldn't the FDIC give the bank the extra week they requested to raise the funds the Fed claimed were absolutely needed to capitalize the operation correctly? Why are taxpayer needs better served by putting us potentially on the hook for $2.5 billon, rather than by giving the bank another week? Would Bank of America be treated the same way? Why did it make sense for the federal government to give FBOP $50 million on Friday morning to help it continue its wonderful investment in the West Side and then shut down the operation on Friday night? Will U.S. Bank follow through and use these funds for local initiatives? FDIC officials I spoke to at the main branch on Saturday claimed answers to such questions "were above their pay grade." Great. Just wonderful. Accountability at its finest.
Local politicians screamed foul on Friday night and then undoubtedly went back to business as usual Saturday. After all, gotta raise funds for the next election, and Mr. Kelly's bank is no longer around. Well Danny Davis, Dick Durbin, Roland Burris, Bobby Rush, et al, we will be watching. We know what was lost. We realize that Main Street and normal folks once again lose, and Wall Street is once more victorious. And many neighborhoods locally have lost their most active partner, key lender and best corporate citizen.
To those unfamiliar with the institution, Park National Bank was the name used by the 30-odd local branches owned by FBOP Corp. First Bank of Oak Park grew up in our backyard, made smart investments in RTC (Resolution Trust Corporation)-seized assets and banks, and put the money to use in expanding a branch network that worked in many urban areas where banking services are scarce. Previously, the branches had used the names of the various institutions that FBOP had cobbled together when they acquired banks usually at the government's urging. Names like Pullman, Cosmopolitan and Regency Savings. FBOP also owned banks in three other states; its three California banks were each as big as Park National was locally. It made loans across the United States. FBOP Corp. had recently moved into the top 100 in banking size nationally, and it was the largest privately held banking group in the country. Locally, FBOP-owned banks were historically in the very top tiers of banks in profitability, safety and community lending.
Where national banks feel community lending means giving large checks, pausing to take a picture with locals for publicity and then hightailing it out of poor neighborhoods, Park National had located virtually all of its branches in underserved neighborhoods. When I worked at the bank previously, I would tell folks familiar with our villages that Park National had two local suburban branches, both located on Austin Boulevard. Not in River Forest, not in downtown Oak Park, but both on the border with one of the poorest communities in Chicago. The bank served everyone's needs. The employees understood the mission, and they embraced the vision. FBOP was truly the local community bank, in oh so many communities. (U.S. Bank, we will be watching, daring you to face the wrath if you close a branch in Pullman, North Lawndale or on the West Side.)
The owner of the bank, Mike Kelly, is the finest person I have ever known. One employee spoke for all on Saturday when she stated her fervent wish was to shake Mike's hand and thank him for the privilege of working for him. His personal generosity was boundless, his intellectual strength unmatched, and his desire to help anyone who came in contact with him unprecedented. Ask around. Speak to friends involved in local nonprofits, in startup schools with innovative teaching methods, ask local ministers and you will find Mike personally involved, usually anonymously. Mike is not a saint; his Irish temper is legendary, though fortunately seen very rarely. He is, however, just the finest man one could ever hope to meet. Seek out any of 100 different employees and you will hear stories, that he would blush to know were told aloud, of his gifts of time and treasure freely and routinely given to those in need.
The bank made investments in communities where most lenders would never go. In whose vision of what strange world are we better off by removing FBOP Corp. from the lending arena? President Obama, this is not the change we were hoping for. I pray that someone asks these questions, and that Fed officials with the proper pay grade are made to account for their actions. And I pray that Mr. Kelly, his family, his senior management team and all his employees find solace somewhere in this tragedy. I ache for you and I struggle to understand why this could be allowed to happen, and why the finest gentleman in the U.S. banking industry is stripped of his ownership and his vehicle for providing so much aid to so many needy organizations and people.
God Bless you, Mike Kelly. You will always have the love and admiration of all of us lucky enough to know you.
Terry Finnegan worked for Park National Bank for seven years. He left, on good terms, in 2008 to start his own business. He is currently a District 200 school board member.