Tucked into stories of Friday’s failure of the nine subsidiaries of FBOP is evidence of a clash of government agencies that seems at first to have had a very unfortunate outcome.
Park National Bank of Chicago, a $4.7 billion asset component of FBOP’s chain, made news earlier in the day Friday when the Treasury Department’s Community Development Financial Institutions Fund bestowed upon it a $50 million award meant to spur low-income housing development. Then federal regulators failed it.
The real story is more complicated and actually less tragic. The Treasury Department is claiming that the $50 million award wasn’t a grant but a tax credit and that it will be finalized with the new owner of Park National: U.S. Bancorp. (which bought all nine banks in the FBOP chain when they failed). No taxpayer dollars were lost in the failure or transfer of Park National over to U.S. Bancorp, and the $50 million in funding will still be there for housing projects when the bank’s subsidiary, Park National Bank Initiatives, needs to use it.
But it’s still hard to believe that anyone from Treasury would want to engage in the fanfare surrounding the CDFI award knowing that the bank in question was about to fail, and indeed the agency can claim it did not know. The FDIC keeps information about the banks it’s planning to close strictly confidential. On the other hand, it was no secret that FBOP as a whole was in trouble and its days were numbered. With the number of bank failures still climbing steadily, Treasury may be examining its future CDFI award recipients with a keener eye.