Issa Probes $394 million Broadway Bank Loss: Why did FDIC wait so long?

Published: Apr 28, 2010

WASHINGTON D.C. – House Oversight and Government Reform Committee Ranking Member Darrell Issa today asked Federal Deposit Insurance Corporation (FDIC) Chairman Sheila Bair to respond to questions about the timing and events behind the FDIC takeover of Illinois based Broadway Bank at the cost of $394.3 million dollars.

“The political circumstance and unusually high cost to the FDIC for a bank of its size necessitates answers from the FDIC about this takeover,” said Rep. Issa.  “American depositors, who ultimately paid nearly four hundred million dollars for this collapse, deserve to know if closing the bank sooner would have cost less and, if so, why this did not occur and who benefited from the decision.”

The letter notes that the FDIC loss from Broadway Bank both is dollars and as a percentage of total deposits is “significantly higher than those figures for the six other Illinois banks closed on April 23, 2010.”  While an Inspector General’s investigation into FDIC’s supervision of Broadway Bank should answer some questions within six months, Chairman Bair is asked in the letter to directly respond to the questions by May 3, 2010, to provide information prior to an expected Senate vote on financial reform legislation that would expand the authority of the FDIC.

 Click here to read Rep. Issa’s letter to Chairman Bair