Regulators shut LibertyPointe Bank in NYC

Regulators shut down LibertyPointe Bank in New York City.

March 12, 2010 3:02:48 PM PST
Regulators have shut down LibertyPointe Bank in New York City, boosting to 27 the number of bank failures in the U.S. so far this year following the 140 brought down in 2009 by mounting loan defaults and the recession. The FDIC was at the bank early Friday, to help customers understand the transition and reassure them that their money remains protected. This is the first bank failure in the city in more than 10 years.

A long computer print-out on the door told the story that LibertyPointe Bank is no more.

Overnight, the FDIC swooped in, declared the bank a failure, and negotiated a deal with Valley National Bank of Wayne, New Jersey, to assume Liberty's assets and deposits and some of it's $182 milllion in bad loans.

Police posted themselves near the entrance in case customers got too emotional.

LibertyPointe has one branch in lower Manhattan and two in Brooklyn.

Its failure is blamed on loan defaults, and real estate investments that went belly up and reportedly prompted the FDIC to tell the bank this past summer to stop lending to developers, and instead, start raising cash to pay off its loans.

Now, time's up, and LibertyPointe becomes another casualty of the recession.

LibertyPointe accounts are protected by the FDIC, so customers will not lose their money. Their accounts will now just be transferred to valley national bank.