Feds Shutter McDonough Bank

Regulators on Friday closed FirstBank Financial Services in Georgia and two California banks, marking nine failures this year of federally insured institutions.

The Federal Deposit Insurance Corp. was appointed receiver of the three banks. FirstBank Financial, based in McDonough, Ga., had $337 million in assets and $279 million in deposits as of Dec. 31. Alliance Bank, based in Culver City, Calif., had about $1.14 billion in assets and $951 million in deposits as of year's end. Merced, Calif.-based County Bank had around $1.7 billion in assets and $1.3 billion in deposits as of Feb. 2.

Twenty-five U.S. banks failed last year, far more than in the previous five years combined. The six failures announced in the last two weeks are double the total for all of 2007.

The FDIC said FirstBank Financial's deposits will be assumed by Regions Bank in Birmingham, Ala. Its four branches will reopen Monday as offices of Regions Bank. Regions Bank also agreed to buy around $17 million of FirstBank's assets; the FDIC will retain the rest for eventual sale.

The parent company, Regions Financial Corp., is a large regional bank company that received $3.5 billion from the Treasury Department under the government's financial rescue program. In August, Regions Bank took over deposits and some assets of another failed institution, Integrity Bank of Alpharetta, Ga.

"As a strong national institution, we believe it is our responsibility to work with and support the FDIC in finding solutions for depositors in these challenging times," Dowd Ritter, the chairman, president and chief executive of Regions Financial Corp., said in a statement.

It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions.

The FDIC estimated that the resolution of FirstBank Financial will cost the federal deposit insurance fund $111 million while that of Alliance Bank will cost $206 million and County Bank, $135 million.

Regular deposit accounts are insured up to $250,000.

Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.

More information for FirstBank customers is here.

(AP)

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Franklin pitches cities bailout plan

Atlanta Mayor Shirley Franklin says a bailout plan for cities that she pitched -- along with mayors of Philadelphia and Phoenix -- was not just a plea for those cities.

Franklin says it's also a request for help for local governments across the country struggling in the strained economy.

Franklin, Philadelphia's Michael Nutter and Phil Gordon of Phoenix lobbied Treasury Secretary Henry Paulson in a joint letter sent Friday. They asked for a share of the proposed $700 billion bailout.

In it, they made the case that dwindling revenues have led to layoffs and cuts in services, and dried-up sources of credit have made it hard for cities to get bonds for infrastructure projects that could provide jobs.

Franklin said in an interview this week at City Hall that lending to cities could help the country climb out of economic crisis -- or contribute to its continuing decline.

(AP)

Feds give Columbus firm $973M bailout bucks

Synovus corporate headquarters along the Chattahoochee River in Columbus. (Dave Bender/file)

Synovus Financial Corp. said Friday it plans to issue stock and warrants to the Treasury Department for a $973 million capital infusion under the federal government's bank rescue plan.

Synovus said it expects to use the capital infusion to strengthen its capital base and enhance its lending capabilities.

"We are especially focused on opportunities to carefully expand our lending efforts to consumers and businesses as we all work through these challenging economic times," said Richard Anthony, the company's chairman and CEO.

Shares of Synovus rose 7 cents to $7.89 during the regular session Friday.

The $700 billion bailout plan is intended in part to help banks navigate the credit crunch and stabilize the nation's financial-services sector.

Many banks have been slammed by a sharp rise in mortgage defaults and freezing of credit markets, making them reluctant to lend to each other or to customers.

Synovus, based in Columbus, Ga., operates more than 300 bank branches in Alabama, Florida, Georgia, South Carolina and Tennessee.

Click here for more GPB News coverage about Synovus.

(AP)

Atlanta requests federal aid

The City of Atlanta wants a piece of Congress's $700 billion-dollar bailout. Atlanta Mayor Shirley Franklin has sent a letter to Treasury Secretary Henry Paulson. She requests help with their pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis. The mayors of Philadelphia and Phoenix have made similar requests. They say cities are facing an economic crisis not seen since the Depression and need help just like financial institutions.

(Associated Press)

Martin assails Chambliss' fed bailout vote

Democratic Senate race candidate Jim Martin, talking to reporters at a press conference in downtown Atlanta, Sept, 16, 2008. (Dave Bender)

Jim Martin Thursday morning slammed Republican incumbent Saxby Chambliss over his vote for the financial market bailout bill late Wednesday night:

“I am disappointed, but not surprised, to see that Saxby Chambliss voted for another typical Washington solution to a very real problem.”

“This updated package still fails to address the fundamental problems created by the deregulation of Wall Street, which Chambliss went to Washington and voted for every step of the way. And it lacks consumer protections to stem the abusive lending practices that are at the root of this crisis - practices that I sounded the alarm on two years ago, long before the mortgage crisis began.”

Martin, in a statement, said that if he wins Chambliss' seat in November, he'll take steps to prevent a similar situation in the future:

“If the bailout bill ultimately passes in its present form, I will work with our next president and the congressional leadership to address these flaws so that we can ensure that another crisis of this magnitude does not threaten our economy in the future.”

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Chambliss: fed bailout crucial for Georgians, country

Republican Senator Saxby Chambliss said his vote for the Wall Street bailout was crucial for Georgians. Chambliss was speaking at a press conference in Atlanta's Hartsfield-Jackson International Airport, Oct 2, 2008. (Carl Zornes)

Chambliss says his Senate vote okaying the 700-billion dollar funding measure is in line with public sentiment:

“The overwhelming majority of the american people, and certainly the majority of Georgians, I know, support the Congress as policymakers, making sure that we don’t slide down into a financial depression.”

While Chambliss voted for the measure, all of Georgia's Republican House members opposed it in a vote on Monday. Chambliss says he hopes they will now throw their support behind the hotly debated bailout.

Sen. Johnny Isakson voted for the bill, as did both presidential candidates, Sen. Barack Obama and Sen. John McCain.

Chambliss says Georgia's economy could take a hit without it's passage. The House is expected to vote on the measure on Friday.

Talking to reporters at the Senate, Chambliss said:

"We’ve got Georgia banks who are crimped from a credit standpoint and aren’t even able to make automobile loans today,"

"We have major employers who are having their lines of credit cut or in some cases cancelled. And it's going to start costing us jobs.”

Addressing reporters at a press conference at Atlanta's Hartsfield-Jackson International Airport the morning after the vote, Chambliss said:

"Taking no action is simply not an option. We simply can't afford for the stock market to have losses of one point two trillion dollars on any kind of regular basis."

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Georgia Senators vote 'yes' to bailout

Georgia’s two Senators voted ‘yes’ to the revised bailout bill Wednesday night in Washington. Republican Johnny Isakson calls the new plan "without question the most important vote and most challenging vote I’ve ever been asked to cast in 30 years as an elected official". Both Isakson and fellow GOP colleague Saxby Chambliss will lobby Republican House colleagues before its vote, possibly tomorrow.

Chambliss released this statement following the vote:

Our country is facing the most serious and critical domestic issue I have dealt with in my 14 years in Congress. We have been betrayed by many people, and greedy Wall Street executives have abused the system, leaving taxpayers to feel the pain.

Today, I had a significant choice to make between two very different courses of action – do nothing at all or do what I truly believe is best for America. I believe to the core of my being that doing nothing will devastate our economy, destroy the financial security of millions of Americans and could possibly force our nation into a depression. I just as strongly believe the bill as it has been negotiated, and that I just voted for, will provide stability during this crisis and will begin to turn our economy around.

Let me be clear – this is not a bailout. This bill has been carefully crafted to arrest our current financial crisis, restore security for the American taxpayer and ensure that our nation is the strongest economic power in the world.

And every citizen can know with confidence that any individual who engaged in illegal activity – whether they are the executive of a financial institution or a member of Congress – if their illegal actions forced our nation in to this crisis - then they will be prosecuted to the full extent of the law.

I know that my vote in favor of this package was not the politically popular thing to do, but this is not a popularity contest. This is about the future of our country and the future that my children and grandchildren will inherit. I have absolutely no doubt in my mind or my heart that my vote tonight in support of this measure was the right thing for our economy, for Georgians and for our country.

Chambliss "surprised" by bailout vote

One of Georgia's Senators says he would have voted YES to the sweeping federal bailout bill defeated by House members Monday.

Chambliss says the plan’s current version contains adequate safeguards and oversight that he--and taxpayers--should feel comfortable with.

Chambliss spoke on Tuesday just back from Washington, where he and fellow GOP Senator Johnny Isakson met with House Republicans. As for GOP House members who voted against the recovery measure, Chambliss offered this:

"We all were opposed to the first two versions...I was hopeful that changes would be made that would convince them they need to support it. They represent different congressional districts...Johnny and I represent nine-and-a-half million people. Sometimes you see things a little bit differently".

As for Chambliss' office getting flooded with calls from Georgians opposed to a massive bailout?

"I can’t worry about politics. This is so important for my constituents and it’s so important for my children and my grandchildren and the economy that they’re going to inherit, that you’ve got to think about what’s in the best interest of the country first".

Democrat Jim Martin is vying for Chambliss’ seat in November. At a candidate forum Monday, Martin blamed the incumbent and the Bush administration for the economy’s condition. Martin says he does not support the current bailout bill.

Marshall voter reaction

On Monday Congress failed to pass a 700-billion dollar rescue plan for Wall Street. Just two Georgia Congressman, both Democrats, voted in favor of the measure. One is in the midst of a reelection campaign.

Macon Congressman, Jim Marshall told a group of Georgia Democrats he is willing to give up his seat over the plan designed to shore up the nation's ailing mortgage industry. Marshall says he hopes the predicted, resulting damage can be avoided and that lawmakers can get back together and salvage the proposal.

Dr. Lori Johnson is a political science professor at Mercer University in Macon. She says constituents in Marshall's 8th District could react badly to his vote.

"It's a fine line he walks between the Democrats and the Republicans and I think this is an example where when it comes to conservative Republican voters in Middle Georgia, they're not going to be pleased by this vote."

Marshall faces a tight election against Republican Rick Goddard for his seat. In 2006 Marshall won with just fifty-one percent of the vote.

Marshall votes yes on failed bailout package

Of Georgia’s 13 House members that voted Monday on the massive 700-billion dollar bailout plan, only two cast 'yes' votes--Democrats Sanford Bishop and Jim Marshall. Marshall, representing 21 mostly rural counties in the 8th district, was quoted as telling some colleagues he was willing to lose his seat over his stand. He told NPR why he had to back the bailout plan.

"I don’t want to help out one wit the irresponsible people who have dragged us into this...whether it's the borrowers, or the lenders, or the investors or the Wall Street crowd. I don't care who they are. But this is something that's going to affect our overall economy and an awful lot of people I represent in the 8th district in a very bad way. So although it's very unpopular, I've got to take a different view and take my licks if that's what I get".

Marshall is in a tough re-election fight as a Democrat in the mainly conservative 8th district.

How Georgia's House Members Voted

John Barrow, 12th District---NO
Sanford Bishop, 2nd District---YES
Paul Broun, 10th District---NO
Nathan Deal, 9th District---NO
Phil Gingrey, 11th District---NO
Hank Johnson, 4th District---NO
John Lewis, 5th District---NO
John Linder, 7th District---NO
James Marshall, 8th District---YES
Tom Price, 6th District---NO
David Scott, 13th District---NO
Lynn Westmoreland, 3rd District---NO

"Clearly that message [of an impending financial breakdown] has not been received by the Republican caucus."---Nancy Pelosi.

"I don't know if we know the path forward at this point...We need everybody to calm down, and relax, and get back to work."---Minority Leader John Boehner

One note---the six hundred or so point drop of the DOW today is, percentage wise, lower than Black Monday or the great sell off that triggered the Depression.

Lawmakers hesitant on bailout

Georgia Republicans and Democrats say they're in no rush to support the Bush administration's proposed $700 billion financial bailout. But despite lots of tough talk about Wall Street greed, most appear ready to go along with some sort of taxpayer-funded intervention. They say the stakes are simply too high. Many said they would wait to see the final package that Congress takes up before deciding whether to support a bailout.

(Associated Press)