State Senator Bob Duff
July 16, 2008
Duff, Representative Barry to Banks Department: State Must Prepare for Potential Failures
Ask commissioner to report on solvency of state’s financial institutions
The co-chairs of the General Assembly's Banks Committee called on the state Department of Banking to report on the solvency of Connecticut's financial institutions as the country continues to reel from the second largest single bank failure in the nation's history.
"The collapse and FDIC takeover of Indymac Bank in California and recent federal action to brace slumping mortgage agencies Fannie Mae and Freddie Mac have shaken the already unsteady public confidence in our financial institutions nationwide," state Senator Bob Duff (D-Norwalk) and Representative Ryan Barry (D-Manchester) wrote in a letter sent to Commissioner Howard F. Pitkin yesterday. "While the collapse of Indymac in particular came as a shock to many-as the mortgage originator was not listed as one of the 90 banks in imminent risk of failure-the chairman of the Federal Reserve has warned that other banks will fail. As co-chairs of the General Assembly's Banks Committee, we feel that it is imperative that we fully prepare for any potential bank failure in Connecticut."
Senator Duff and Representative Barry requested detailed information on any state-chartered banks and credit unions that may be at risk of failure. Additionally, they requested information regarding any federally chartered institutions operating within the state of Connecticut that are in danger.
"We need to ensure that our banks and credit unions are solvent," the chairs continued. "We know that the Department of Banking shares with us a deep commitment to protecting Connecticut consumers in their associations and transactions with financial institutions and to assuring the safety and soundness of our banks and credit unions."
On Friday, federal regulators seized assets from the Indymac Bank, the largest savings and loan in Los Angeles and the seventh largest mortgage originator in the United States. The lender succumbed to the pressures of tighter credit, falling home prices and rising numbers of foreclosures nationwide.
Connecticut currently has the nineteenth highest rate of foreclosures in the country, according to the most recent reports from RealtyTrac, Inc.
Download the referenced joint letter to the state Department of Banking
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