Author Topic: Failed bank required employees to borrow from another bank and buy its stock  (Read 3643 times)

Offline Mr. Bill

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Seems like even some small regional banks have been getting into shady dealings.

Failure of bank causing problems for other banks

Quote
The failure of the Bank of Whitman is causing problems for other banks in the Spokane area.

Recent court filings and public records show RiverBank of Spokane loaned large sums of money to employees of Bank of Whitman for stock purchases...

Many of those loans are now in default...

A Bank of Whitman manager, Kyle York, said top bank executives ordered him in December 2006 to buy 3,500 shares of the holding company's stock at $101 per share. To fund the purchase, York was presented blank loan documents from RiverBank to borrow $353,843.

Other documents described how the loan would be collateralized by the 3,500 shares of Bank of Whitman stock he was buying. To repay the loan, York would be awarded sufficient bonuses and dividends to make the payments.

As Whitman's financial condition eroded and its stock was rendered worthless, the bank stopped making the agreed-upon bonus payments to York. ...

Offline Oil Lady

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I need a scorecard!

Or a flowchart!

Or a freeze-frame image of some kind here!

Who what and where????





Offline Mr. Bill

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I need a scorecard!

Or a flowchart!

Or a freeze-frame image of some kind here!

Who what and where????

Bank W is in trouble, and its stock price is collapsing.

Bank R has money to lend.

Nobody wants it to be obvious that Bank R is helping Bank W.

So Bank R lends to Hapless Employees X, Y, and Z.  Bank W requires X, Y, and Z to take the loan and buy Bank W stock, otherwise they get fired.

Stock price continues to collapse; X, Y, and Z end up with worthless shares, and big loan debts to Bank R which they are disinclined to pay.

Everyone goes to court.  Lawyers get lots of money.  Taxpayers pay lots of money.  Game over.

Offline Morning Sunshine

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 :o

sigh.  wow.  words cannot describe how wrong this is.  makes me want to pull ALL my cash outta the banking system (we actually use a credit union, but still!) and buy gold/ silver this weekend.

Offline GreyWolf

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Well nothin wrong with taking your money out, keeping half and buying precious metals with the other half.

Offline LJH

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:o

sigh.  wow.  words cannot describe how wrong this is.  makes me want to pull ALL my cash outta the banking system (we actually use a credit union, but still!) and buy gold/ silver this weekend.

No kidding. I use a credit union for my business and a regional bank for our personal stuff. I figured they'd be among the last to implode when it starts hitting the fan. Lately I've been thinking about just putting cash in a strongbox at home. Spooky times.

Offline odimodus

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Apparently people havent learned enough from the Enron debacle.

Offline Roundabouts

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This is crazy.  I would not borrow money 300+K that I knew I could not pay back just to keep my job.  That is beyond dumb.  That should have been a wake up call to people to abandon ship before it sinks.  Maybe I just didn't read that correctly.