COLUMBIA, SC (WIS) - Three South Carolina banks have failed in 2010 -- two last weekend, and another in April. The Federal Deposit Insurance Corporation is stepping in to keep some other banks from suffering the same fate.
The FDIC has been issuing consent orders to banks in danger of failing. Although no local bank officials would talk on the record about the consent orders, a representative from the FDIC spoke by phone about what this means and what customers need to know.
Carolina First Bank, Community South Bank and Trust, Congaree State Bank and the South Carolina Community Bank are four South Carolina banks under consent orders from the FDIC.
"It's a way to make sure that these banks don't get far afield and then get into some sort of financial trouble," said FDIC spokesman Greg Hernandez.
According to the FDIC, a consent order is an agreement between the bank and the feds to outline certain things a bank needs to correct. Hernandez says there are a number of things that could lead to a consent order.
"A bank may be having or offering interest rates or CDs or deposit accounts that are way beyond what the normal market conditions would bear," said Hernandez. "That may put the bank at risk."
The FDIC will not talk specifically about open and operating banks. However, Easley-based Community South Bank & Trust signed a consent agreement on February 26, Columbia-based South Carolina Community Bank signed on April 28, Greenville-based Carolina First Bank signed on April 30, and West Columbia-based Congaree State Bank signed its consent agreement with the FDIC on May 14.
"The majority of banks under consent orders comply and the consent orders expire and they go one to be thriving institutions and continue to be very important players in the community," said Hernandez.
Hernandez says the four banks are like many others across the country. A large number of defaulted loans during the economic downturn is having a ripple effect now.
Hernandez says the average person should not worry about money he has in any bank.
"If they are under the $250,000 deposit insurance limit, their money is safe and sound," he said. "If an institution does fail, their money is always protected."
These orders do not mean customers of these banks should pull all of their money from the bank. This is a preventive measure to keep the banks from failing.
Three of the four banks said they are or have already addressed the issues in the consent order. Since Carolina First's parent company is in the middle of a merger, the company representative would not talk specifically about the consent order. He did say the merger, if complete, would address most if not all of the matters in the consent order.