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WASHINGTON - The US Treasury has shut down two affiliated western banks as the impact of the US real estate crash rolls through the country's financial institutions.
Late Friday, the Treasury's Office of the Comptroller of the Currency took over First Heritage Bank of Newport Beach, California, and First National Bank of Nevada, based in Reno, Nevada, declaring both undercapitalized and facing losses that would wipe out their capital.
"The 28 offices of the two banks will reopen on Monday as branches of Mutual of Omaha Bank," the Federal Deposit Insurance Corporation said in a statement.
"All depositors, including those with deposits in excess of the FDIC's insurance limits, will automatically become depositors of Mutual of Omaha Bank for the full amount of their deposits."
In addition to taking over the deposits, Mutual of Omaha Bank will pay 200 million dollars for assets of the two closed banks, which are now in receivership under FDIC control.
The closures took to 10 the number of banks closed in the country in the past 18 months, as the collapse of real estate prices, the spread of mortgage defaults and the crumbling of the markets for billions of dollars worth of securities tied to mortgages.
Earlier in July, the FDIC seized control of the large IndyMac Bank, which was weakened by heavy exposure to risky sub-prime mortgages and collapsed after a run by depositors.
The closures also came as the US Congress approved a package of measures to shore up Fannie Mae and Freddie Mac, the two huge publicly-owned, government-chartered home finance banks that touch some 50 percent of all mortgages in the country.
Both the newly closed banks were owned by First National Bank Holding Co. of Scottsdale, Arizona.
- AFP /ls
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