Feds couldn’t help bank, but came through for depositors

It certainly isn’t is as big as Fannie Mae or Freddie Mac, but the federal government seized control of Home Savings of America bank just as it did the two mortgage giants more than three years ago.

As cars with license plates from states from across the nation converged at the bank in Little Falls Feb. 24, it was clear there was a problem — at least to those passing by or looking out of nearby store windows.

For many of the people who had accounts at the bank, it wasn’t clear at that point in time. No advance notice is given to the public when a financial institution is closed.

It wouldn’t be clear to many until their debit cards failed to function or they were unable to access their online accounts to do business.

For nearly 78 years, the bank once called Community Federal Savings and Loan, has been a mainstay on the corner of Broadway and Wood Street across from the post office. Since it was chartered in 1934, many a home, car or business owner made their way to the community bank for a loan and millions were tucked away for a rainy day in savings accounts.

But no more.

Along with three branches in California, the headquarters in Little Falls was closed by the Office of the Comptroller of the Currency. The Federal Deposit Insurance Corporation (FDIC) was named as the receiver. It seems, as with other small banks, no one wanted to purchase a bank with more liabilities than assets.

Account holders were protected by the FDIC — their accounts were insured up to $250,000. Checks were in the mail Monday, estimated at $38.8 million for depositors at all four banks. About 30 depositors will lose money in the deal, as they had more than the insured amount in their account. A senior ombudsman specialist who was in Little Falls during the incident, couldn’t say how many of those were local depositors.

While the federal government isn’t in the banking business — and few want it to be as was made clear during Fannie and Freddie bailout in 2008 — it is a good thing for Home Savings of America’s depositors that the government has regulations and controls in place, as well as insurance to prevent the loss of folks’ hard-earned money.

People shouldn’t start hiding all of their money under a mattress, although it may be wise to hide some away or have access to money in accounts at more than one bank.

One thing is certain, people in this situation will always be grateful that the government comes through for depositors.