Reporting Bob Roberts
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CHICAGO (CBS) – The failure Friday of New City Bank has left depositors in limbo, but it won’t last for long.
New City checks and ATM cards are no good. Those checks already written that did not clear New City by Friday evening won’t be honored. But FDIC checks for the full insured amount of each account will be in the mail in Monday morning.
Ombudsman Ray Rudnicki said FDIC also is giving each depositor a letter, asking banks not to charge return fees and those being paid not to impose late charges.
“They didn’t know it was going to close when they wrote the check,” he said.
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Despite that, New City’s problems were no secret. Its portfolio of defaulted loans had skyrocketed in recent months. State regulators closed the bank, located at 900 S. Michigan Av., after months of warnings. And no other bank wanted its assets.
Saturday, access to the ATM machine was cut off. A few customers came in to make loan payments or clean out their safe deposit boxes, but the only other activity at the bank was FDIC personnel determining who had what in FDIC-insured accounts.
Non-IRA interest-bearing accounts are fully insured up to $250,000, as are all deposits in accounts that did not accrue interest, such as checking accounts. IRA deposits are insured separately for up to $250,000.
Those whose accounts were not fully covered by FDIC insurance are advised to call (800) 523-8173 to schedule an appointment with an FDIC claims agent.
New City’s failure had been rumored for some time. Rudnicki said that the move has no connection to the tax fraud charges filed by federal prosecutors last month against the bank’s vice chairman, Cook County Commissioner William Beavers.
As of Dec. 31, New City Bank had $71.2 million in total assets and $72.4 million in total deposits.
The failure is the 13th bank failure nationally this year and the second in Illinois. Rudnicki said that the failure will cost the FDIC Deposit Insurance Fund an estimated $17.4 million.