When banks go bad

Nothing quite kills that T.G.I.F. buzz like word that your bank has been seized by the feds.

But it’s even more of a downer if you happen to be the financial reporter on duty, with an empty notebook and two hours to go before that 7 p.m. deadline.

Think it can’t happen on your watch? So far this year, regulators have shut down nearly 80 banks, ranging from $25 billion household names like Colonial Bank to little Corn Belt Bank and Trust Co. of Pittsfield, Ill.

With four more months left to go in the year and a recent warning from Congress that many banks still are in jeopardy due to the troubled loans and other iffy assets they hold. (For basic information about understanding bank financials and regulation, check out this previous tipsheet.)

Doing a little advance work could save you a lot of stress one of these Friday nights. Besides, few things rattle readers like bank failures, and you’ll want to be their go-to site for updates and reassurance.

Few industries have such labyrinthine regulatory arrangements – depending on a bank’s charter they could be supervised by one of several state or federal agencies. Before crunch time, you might want to make a simple spreadsheet listing the financial institutions in your area, the relevant oversight body and key after-hours contact info for each.

Fortunately the Federal Deposit Insurance Corp. (FDIC)– the government body that insures deposits and usually becomes the receiver of troubled banks – also is a central clearinghouse for reporters and consumers.

Andrew Gray, the FDIC director of public affairs, says the FDIC sends out press releases on every bank closure concurrent with the release from the regulatory body. Nothing is ever embargoed or released selectively in advance, Gray said, because generally banks are scurrying until the absolute last minute to obtain financing or other means of staying liquid. So if you go to the FDIC site and sign up for e-mail releases, you’ll get the news at the same time everyone else does.

The FDIC and related sites also have a font of consumer protection info, with FAQs about deposit insurance and other things your readers want to know. With so many bank failures in the news right now, it would be smart to put together a little Web package outlining bank insurance basics, hotlines, Internet sites and other resources. Then, if one happens in your market, you can pop that up online with a few preliminary points from the press release and not waste precious time creating a fact box.

Bank failures tend to be announced on Friday nights, Gray said, because it gives the feds the weekend to straighten out paperwork and “make sure it’s business as usual on Monday morning. Consumers are going to see the same faces they saw on Friday.”


For reporters, it’s not as grim as after-hours news could be – Gray said the media is welcome on site at failed banks – the next day, if the bank in question has Saturday hours - and that one of his staff or an FDIC ombudsman will be on hand to field questions. Better yet, the media relations contact numbers on the FDIC releases are answered nights and weekends, so you won’t have to wring your hands until Monday for official comment. If the failed bank is being acquired, the FDIC likely can put you in touch with the new owners, Gray said.

Of course, you’ll also want to talk to bank patrons, industry analysts and shareholders – more people whose cell phone numbers you should get now, not next Friday at 5:45 p.m.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.

Car Stories that Sell

Automotive dealers got the final rules and regulations for the “cash for clunkers” program Friday, and already over the weekend hastily-produced local TV ads were exhorting buyers to take advantage of the deal.

In a nutshell, the federally sponsored “Car Allowance Rebate System,” as it’s formally known, offers credits of up to $4,500 to people who trade in older cars and trucks for more fuel-efficient new models. The credit applies to purchases, and even to auto leases of at least five years. Trade-ins can be foreign or domestic as long they’re less than 25 years old, be drivable, and average 18 miles to the gallon or less.

To ward off “flippers,” the new law also requires that trade-ins be registered to the new-car buyer for the past year. The program will be in effect until Nov. 1 or until the federal funding is exhausted. Complete details about the program are available at the CARS program Web site.

In a year where auto sales so far are hovering around a three-decade low and major domestic manufacturers are closing thousands of dealers, any jump start to car buying is noteworthy.

You might approach this from a dealer perspective and marry it with an update (and infographic) about the status of car retailers in your area. The National Automobile Dealers Association, a trade and lobbying group, also offers commentary, statistics and updates at its site. An interactive map purports to outline the economic impact of auto sales in each state; it’s worth a look.

Or, you could run a consumer affairs or personal finance story instead. There are a couple of caveats in the fine print of the CARS rules worth pointing out:

• Since the new law – predicated on fuel-mileage concerns -- requires the traded-in gas guzzlers to be crushed and scrapped rather than resold, consumers likely won’t get the standard trade-in allowance for their old cars. They’ll want to weigh the lost value against whatever level of CARS credit they’re eligible for.

• The credited amount might not be exempt from sales tax; depends on the laws in your state so worth a call to the treasury department.

• Many older cars – including the 1997 purple Ford Escort sitting in my driveway – won’t make the cut for the credit because they still get make pretty decent miles per gallon. Consumers can look up their car’s eligibility by using this calculator. It’s rather ironic that those of us responsibly driving fuel-sippers all along won’t be able to cash in on the credit, isn’t it?

• The credit must be applied against a new vehicle costing less than $45,000 – so luxury auto dealers probably aren’t going to yield the best CARS color for your story.

Come back to Your Daily Tipsheet each morning for advice on where to find sources, background and creative ways to make financial news and trends relevant to your audience.