Watchdog Faults FDIC Oversight of Failed Texas Bank
July 23, 2009
By MoneyAisle
According to the Wall Street Journal, an internal “watchdog” claims that the FDIC should have been more vigilant in watching a now failed Texas bank and trying to implement necessary changes.
“The FDIC’s office of inspector general said in its report that Houston, TX-based Franklin Bank failed primarily due to management’s ‘high-risk business strategy.’ But regulators still should have done more to prevent the bank from failing, auditors said, a collapse that was estimated to cost the government’s deposit insurance fund $1.5 billion.”
Federal watchdogs feel that bank regulators should have focused more on poor banking practices, including “risky real estate lending and a reliance on volatile funding sources.”