FDIC: Shut down US Century Bank, now ... by gimleteye

The astounding report by ProPublica on US Century Bank shows the nation's banking regulator, FDIC, asleep at the switch when the largest distribution of TARP funds in Florida was made to politically connected directors of the Miami-based bank who substantially shaped the state's political landscape. (Every county commissioner in Miami-Dade County, who solicited for money through US Century Bank, its friends and family as the housing boom metastasized in wetlands and farmland in West Dade and historic Everglades, knows exactly what I mean.)

"It is hard to imagine a more obviously reckless and foolish use of TARP funds than U.S. Century in 2009," said Richard Newsom, a former FDIC bank examiner who has looked at the bank's public financials. "Contrary to TARP guidelines, this bank was in deep, likely fatal, trouble when it received TARP funds. It should have been subject to an enforcement action in mid-2009, not awarded $50 million in taxpayer dollars."

US Century Bank would have been closed down years ago, if not for the cash infusion of tax payer-backed dollars through TARP. The question is not answered: how did FDIC miss the disaster at US Century? With respect to the TARP moneys, either US Century lied in its filings and "cooked the books", or, it received a political push from its friends in DC. Whatever the answer, the public deserves to know. To ProPublica, the bank issued blanket "no comment" and refusal to answer phone calls.

Those details could be disclosed in a FDIC enforcement action against US Century and its directors, including Ramon Rasco-- key figure in the Homestead Air Force Base fiasco--, or shareholder lawsuits. If there are investors gullible enough to take over US Century now, the details could be buried for a considerable length of time.

US Century Bank became popular as "local boys made good". Depositors have no idea. Bank directors bet the farm on land speculation; manipulating local government processes, turning a federally chartered bank into a personal piggy bank (US Century Bank is rated "zero" by Bauer Financial. Measured against peers, its ratio of insider lending to standard banking metrics is off the charts. So far, there is no way to know exactly what loans, for mortgages in what areas of Miami-Dade, those ratios connect to.), tying up environmentalists and citizens and neighborhoods in knots, from Doral to Homestead. When environmentalists cry "foul" and say the playing field isn't level, this is exactly the example: civic groups cobble together a few dollars to support outreach efforts like "Hold The Line" on the Urban Development Boundary (the target of US Century Bank directors/speculators while regulators in local and state agencies cower in their foxholes) while the lobbying effort of insiders is funded by manipulating banking rules and laws.

From a 30,000 foot view, all the environmental skirmishes -- from water quality to wetlands to the Urban Development Boundary, Everglades Restoration and the fiasco of Homestead Air Force Base (Ramon Rasco and partners) that tied up the 2000 presidential election in Florida -- were for naught. It was about the crack cocaine of the housing boom and the massive wealth transfer grounded in arrogance and greed.

The public was taken for fools then, but the tables are turning in the worst economic crisis since the Great Depression.

To find a symbol of what went wrong, and is still going wrong: take a close look at US Century Bank. Earlier this summer, the FDIC issued one of the toughest Consent Orders ever. While the FDIC isn't required to publicly disclose an update, the public should demand one now.