Comments on Advance Indiana™: Unbelievable: Irwin Bank Closed By Federal And State Regulators

Actually Indiana banks (what's left of them) a...

2009-09-21T16:29:56.458-05:00

Actually Indiana banks (what's left of them) are in pretty good shape. The only other Indiana banks in trouble was the Lafayette Community Bank that went under and Integra Bank National Association in Evansville that had a written agreement and they could still go under. The sortable list for all banks is located at: http://www.calculatedriskblog.com/2009/09/problem-bank-list-unofficial-sept-18.html
I played golf with a friend of mine this summer that works for Star Financial in Anderson. He stated that Star Bank had not made any of those silly no down payment, no verification loan home loans. He said that 2008 was their best year and 2009 through 2010 will be difficult because of the economy. At least it's good to know there are still small intelligent banks out there that didn't get caught up giving out bad loans.

I think, CK, is that part of the natural business ...

2009-09-20T21:50:06.292-05:00

I think, CK, is that part of the natural business cycle is a "boom and bust" pattern; however, what happens is when an kind of indicator on the economy flashes red, politicians and bureaucrats jump in to try and make adjustments and pump the numbers back up.

Usually, those indicators are a sign that there is an imbalance and the economy needs to adjust; however, they then intervene to prevent it. The bubble or imbalance swells ever larger and eventually gets to a point where there really isn't anything (not totally insane) that can be done.

Unfortunately, the current crop of nimrods in DC think "too much debt and spending" can be fixed by "more debt and more spending" and continuing to subsidize asset purchases with either CASH or artificially low interest rates and a phony credit economy with little savings.

Exactly my point - bubbles do pop and they should ...

2009-09-20T14:19:02.103-05:00

Exactly my point - bubbles do pop and they should recognize one and act accordingly. There is no reason to make excuses for the too-smart by half crowd who think they can deal themselves a winning hand despite all evidence to the contrary. The west coast has always operated on a housing ponzi scheme; it has just exported to the nation by the Fed's manipulation of the free-market. And it hasn't stopped as nearly every building project going on now is being induced by perverse government incentives and the persuasive influence of cheap money.

I will guarantee that there were many employees of the bank against these get-rich quick policies, which invariably only boosted the short-term bonuses of the executives and which now have put the jobs of their employees at risk. If anyone investigates, the truth will come out and it won't be pretty.

Anyone with any common sense would know that west coast real estate was nothing but dynamite waiting for the fuse to be lit. It's a wonder that they did not also invest in Miami condos or Dubai.

Of course, business is risky in a free-market. It is even more risky in an phony economy. Despite what many people claim, severe booms and busts are not a natural phenomena. Booms and busts are almost always caused by some unnatural event, of which government is the primary unnatural factor encouraging mal-investment.

I'm going to counter some of the vitriol, just...

2009-09-19T08:54:02.462-05:00

I'm going to counter some of the vitriol, just for purposes of keeping an open mind whether warranted or otherwise, with the thought that nearly all business hope to grow and expand and it sometimes very risky to do so.

Could a more conservative approach been undertaken to expand and grow, sounds like it but to suggest that a bank or any other business just be content with the business on their street corner or in their own area without desiring more ... well, I'm sure my point is clear.

BUT, let us not forget that the easy credit policies of the Federal Reserve, which manipulates and controls interest rates as opposed to letting the free market supply/demand/risk components of such dictate terms had a lot to do with inflating market bubbles - which always pop at some point.

Hubris, nothing more, nothing less.

2009-09-18T21:33:42.715-05:00

Hubris, nothing more, nothing less.

One of the VPs lives down the street from me in Re...

2009-09-18T21:30:24.586-05:00

One of the VPs lives down the street from me in Reggie Miller's former condo. He drives a late model two-seater Mercedes.

This is what happens when people only interested i...

2009-09-18T21:07:17.251-05:00

This is what happens when people only interested in their own financial gain enter the picture.

They only cared about making a quick killing and to hell with everyeone else.

You'll notice the story makes no mention of these white collar thugs. Why? The ones who engineered the demise ought to be given plenty of press so everyone know who is to blame.

And I imagine they are sitting on fat bank accounts in fine homes and not feeling one bit of remorse or pain regarding this collapse.