LibertyPointe Bank Shuts Down

LibertyPointe Bank was shut down on Thursday by regulators, which increased the number of bank failures to 27 so far this year compared to the 140, which were bought down last year due to the increasing loan defaults and recession.

LibertyPointe which has 3 branches with $209.7 million in assets and $209,5 million in deposits was taken over by the FDIC i.e Federal Deposit Insurance Corporation. The bank’s clients were mostly Orthodox Jewish community settled in Manhattan and Brooklyn.

Valley National Bank has agreed to take over the assets and deposits of the LibertyPointe Bank. Valley National bank has further agreed to share the losses to the tune of $181.5 million the loans and other assets of LibertyPointe Bank with the Federal Deposit Insurance Corporation.

Due to the Jewish Sabbath falling at sunset Friday instead of Saturday the FDIC was appointed the receiver on Thursday instead of Friday as is customary for bank shutdowns. Also the fact that most of the bank employees were observant Jews who don’t work on the Sabbath Day and the FDIC’s process for failed bank requires the bank employees to work with the agency staff to facilitate the transition after the closure of the bank.

LibertyPointe bank failure is said to set the federal deposit insurance by around $24.8 million. As the economy has weakened, bank failures have increased leading to billions of dollars being paid from the deposit insurance fund . FDIC officials state that the number of bank seizures will only increase in the coming months.

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