The US banking system has suffered another blow, with regulators shutting down a bank in Oklahoma. This marks the second bank failure of 2024, following the collapse of Philadelphia-based Republic Bank earlier this year.
What Went Wrong?
The First National Bank of Lindsay was closed by the Office of the Comptroller of the Currency (OCC) after uncovering some serious issues. The OCC found that the bank had been cooking the books, with false and deceptive records suggesting fraudulent activity that drained the bank’s capital.
The OCC also determined that the bank was in a precarious financial state, unable to conduct business safely and with assets falling short of its obligations to creditors. The OCC is now referring the case to the US Department of Justice for further investigation.
Deposits Safe, Bank Doors Closed
The Federal Deposit Insurance Corporation (FDIC) took swift action, locking the bank’s doors before the weekend. All deposits have been transferred to First Bank & Trust Co. in Duncan, Oklahoma, ensuring that depositors won’t lose their money.
Echoes of Past Failures
The closure of the First National Bank of Lindsay echoes the recent string of bank failures in 2023. Silicon Valley Bank, Signature Bank, and First Republic Bank all went under due to similar issues: liquidity pressures, poor risk management, and losses on investments.
While Signature Bank had sufficient capital, a rapid outflow of deposits forced regulators to intervene.
This latest bank failure serves as a reminder of the ongoing challenges facing the banking industry. Regulators are working hard to ensure the stability of the financial system, but these failures highlight the need for vigilance and responsible practices.
