The Day that Was - September 28th 2007

Is being written now.. Look for an expanded writeup when completed..

In the mean time take a look at something that caught our attention after the market closed:

From the Associated Press:

WASHINGTON (AP) -- NetBank Inc., an online bank with $2.5 billion in
assets, was shut down by the government on Friday because of an excessive level
of mortgage defaults.
It was the largest savings and loan failure since the
tail end of the industry's crisis more than 14 years ago. Federal regulators
appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta,
Ga.-based NetBank.
Customers with less than $100,000 deposited with NetBank
will be protected by FDIC insurance.
While dozens of mortgage companies have
closed due to soaring defaults of home loans made to borrowers with weak, or
subprime, credit, those problems previously had occurred among non-bank lenders
such as New Century Financial Corp. NetBank, in contrast, is federally
regulated.
Loose mortgage standards in recent years -- especially among
lenders catering to subprime borrowers -- have resulted in a spike in home loan
defaults.
Bert Ely, a banking consultant based in Alexandria, Va., said
NetBank was in "deep trouble" before the subprime mortgage market's woes
accelerated this year. Regulators, he said, "should have closed it a long time
ago."
While some Internet-only banks are successful, he said, operating one
without retail branches can be a difficult strategy to maintain.
The FDIC
said Friday that $1.5 billion of NetBank's insured deposits will be assumed by
ING Bank, also a major online bank that is part of Dutch financial giant ING
Groep NV. ING will pay $14 million for the deposits and receive 104,000 new
customers.
NetBank, which had no physical branches, sustained significant
losses last year "primarily due to early payment defaults on loans sold, weak
underwriting, poor documentation, a lack of proper controls, and failed business
strategies," the Office of Thrift Supervision said in a statement.
The FDIC
said NetBank had $2.5 billion in total assets and $2.3 billion in deposits as of
June 30.
The OTS oversees about 830 savings and loan institutions, or
thrifts, ranging in size from giants like Seattle-based Washington Mutual Inc.
to small community banks. By law, thrifts must have at least 65 percent of their
lending in mortgages and other consumer loans.
The last major thrift to be
closed by regulators was Superior Bank of Hinsdale, Ill. It had total assets of
$1.9 billion and was shut down in July 2001. Its failure has so far cost the
FDIC's insurance fund an estimated $273 million.
In June 1993, regulators
shut down Western Federal Savings and Loan Association, which had total assets
of $3.8 billion. That thrift's owners included former Treasury Secretary William
Simon and former Federal Reserve Board Vice Chairman Preston Martin.
NetBank
had reached a deal to sell its deposit accounts and other assets to privately
held EverBank of Jacksonville, Fla., but EverBank announced this month that the
deal fell through.
EverBank in July completed its acquisition of NetBank's
mortgage servicing business, and the FDIC said Friday that EverBank will
purchase about $700 million in mortgage loans.
"Customers of NetBank should
have confidence and security knowing that they will have access to their insured
funds in a timely and orderly manner," FDIC Chairman Sheila Bair said in a
prepared statement.
The FDIC insures bank deposits of up to $100,000.
NetBank had $109 million in deposit accounts that exceeded the FDIC limit.
Those customers will become creditors in NetBank's receivership, the FDIC said.
The FDIC has a toll-free number for customers affected by the
failure:1-888-256-6932.
AP Business Writer Marcy Gordon contributed to this
report.