NetBank has been shutdown by Feds
It’s a rare event nowadays, but nevertheless FDIC shut down an Internet-only bank NetBank, with ING Direct assuming the deposits. The online bank has been a good source for some sweet deals on online deposits, and charged no fees for incoming wire transfers - a rare deal nowadays (but the one that’s still supported by EverBank).
What’s amusing is that the bank has not even had that much exposure to subprime market, it was just a mess as far as execution and business model were concerned. There’s a post-mortem by Wall Street Journal:
But its Achilles’ heel was sloppy underwriting of loans, according to federal regulators. The Office of Thrift Supervision said weak underwriting standards, failed business strategies and a lack of proper controls forced NetBank to suffer significant losses - including more than $200 million for 2006.
Their customer service wasn’t that great either, but I guess that’s expectable when the management is trying to cut losses. Same article also points out how infrequent bank failures have become:
Of 8,600 banks insured by the FDIC, only one other has failed this year - Metropolitan Savings Bank of Pittsburgh. NetBank is the biggest failure since the June 1993 failure of Western FSB, Marina del Rey, Calif., which held $3.8 billion in assets.
I like how FDIC is managing the transition - NetBank site is down for right now, but will be back on Sunday evening in its original shape, although managed by ING Direct. There’s no migration process, no calls to the customer support to verify your identity - the site will just come back as it is, allowing old usernames and passwords.