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 Federal Government Closes Banks In California And Oregon: Millions Of Investors $ At Risk

California Bank Closed by FDIC; Customers Have More Than $30 Million at Risk

TORRANCE, Calif. (AP) - The federal government has closed the failed Southern Pacific Bank, casting doubt over the future of more than $30 million in deposits.

Southern Pacific was the first failure this year of a bank backed by the Federal Deposit Insurance Corp., officials said. Its three Torrance offices are expected to reopen this week under Beal Bank of Plano, Texas.

Customers of Southern Pacific will become Beal customers. But the FDIC only insures deposits up to $100,000 per account. About $30.7 million in nearly 1,000 accounts was uninsured.

FDIC spokesman David Barr said customers may be able to recoup some of the money.

"They could get a portion of that back as we settle the assets," he said Friday. "Over the past 10 years, uninsured depositors have received an average of 70 cents on the dollar in bank failures."

Debt risk forces bank closure

Statesman Journal
February 8, 2003



BEAVERTON — Federal authorities have revoked lending authority for a Beaverton-based bank that processes credit cards for clothing and household goods retailers Eddie Bauer, Newport News and the Spiegel Catalog.

Under a cease-and-desist order, First Consumer National Bank must dissolve itself as a bank, losing its lending authority, after an audit of its parent company found risky levels of debt.

The 14-year-old company founded in Beaverton will be forced to shutter a big chunk of its headquarters and an Albany call center if it cannot find a buyer. The bank employs about 1,200 people in Oregon.

Auditor KPMG filed a letter Tuesday with the Securities and Exchange Commission, saying parent company Spiegel Group, based in Downers Grove, Ill., had failed to comply with its debt agreements or re-negotiate its debt.

Spiegel’s chief financial officer resigned Wednesday.

First Consumers National Bank manages MasterCard and Visa accounts nationwide, and retail credit cards for Spiegel Group holdings, which includes Eddie Bauer and the others.

At the end of 2001, the bank’s credit card customers had $1.3 billion in outstanding balances and its retail credit card holders had $2.3 billion.