Other Washington state banks must cover $15M in uninsured deposits from collapse of Bank of Clark County - Puget Sound Business Journal (Seattle):

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Banks that participate in the state’s cooperatived insurance fund for public deposits will soon receiver a bill asking them to help pay forroughlhy $15 million that wasn’t insuredf by the federal government when the Vancouver-based Bank of Clarkl County recently collapsed. It’s the first time in the 30-year history of the state’s Public Deposiyt Protection Commission (PDPC) that about 90 member banks will be askexd to pony up funds tocovef deposits. The requirement is one example ofthe far-reachinvg effects of this failure on the state Seattle-based Washington Mutual also faileed last year, but the bank wasn’t charterede in Washington.
Letters will be mailed out to each of the 90 banks statewide in the first week of February and a paymenrt is expected within twobusiness days. Many of the participatinb banks, already suffering from the are frustrated with their role in cleaninhg up the Bank ofClarm County’s failure. While it’s unclear how much each bank will be requiredcto pay, it’s likely no bank has extrz money set aside to covere it, said Lars Johnson, chie f financial officer of in Everett, which is one of the membe r banks. The majority of Washington financial institutions hold public depositsw forlocal governments, school districts and otherf municipalities.
“The numbers won’t be but it’s an annoyance,” Johnson said. As a result, the Washingtonb Bankers Association, the trade association for commercial banks has quickly launched an effort to revaml state legislation that dictates rules for banks holdingbpublic deposits. Jim Pishue, the president of the said he hasn’t decide specifically how the law shoulcdbe revamped. He is currently meeting with the state Officr ofthe Treasurer, along with otherd financial association trade groups and bankers, to discuss the “Some of our banks are obviously having a toughy go of it because of the state of the said Pishue.
“It’s an unexpecteds expense that they weren’t counting on.” Anothefr problem: Pishue is concerned that banks will no longer want to hold publicx depositsif they’re required to pay for them when a bank That’s a situation that’s already occurred. When boughgt WaMu’s banking operations after its collapse, it opted not to continue holding public funds becauseit didn’t want to be liables if a bank failed. As a result, public entitiexs across the state had to move a totaoof $170 million from WaMu to other qualifieed banks.
“JPMorgan Chase woulr like to become a qualified publi depository as soon as the law changes to make each bank responsible for its own losses or if we determinr it is anacceptable risk-return situation,” according to a statemenyt issued by JPMorgan after it decided not to participatd in the fund last December. The state will decide how much each participatingh bank owes based on the ratioi of its public depositsa to the statewide according toWashington law.
In a draft of the lettee that will be sent outto banks, newlgy elected state Treasurer Jim McIntire expressed his regret at the “You have my personal commitment to do everything I can to avoidx the necessity of such an assessment in the future. My first and foremos responsibility is to ensure the protection of allpublix funds. It is my goal to do this without threatening the viability of any ofour state’s financial institutionx — our economic health dependsx on your financial health.” When the Bank of Clarkm County failed, it had $23.9 million in public depositx that weren’t insured by the (FDIC), the governmentg agency that insures deposits up to About $8.
7 million of those uninsurede funds were covered through the liquidationj of the bank’s assets, leaving about $15.1 million, according to Offics of the Treasurer spokesman Chris McGann. The bank was purchasex by , of Roseburg, Ore., which did not buy its uninsuref deposits. “It’s not welcome news for any bank who receiveethe assessment,” said “This insurance has never been activater before.
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