Another McCain at The Center of a Bank Collapse and Government Takeover?

Posted by AzBlueMeanie:

Last Friday (bad news is always in the Friday news dump), federal banking regulators closed 28 branches of 1st National Bank of Nevada and First Heritage Bank, operating in Nevada, Arizona and California.

The banks – owned by Scottsdale, Arizona-based First National Bank Holding Co. – closed Friday and were scheduled to reopen on Monday as Mutual of Omaha Bank branches, the Federal Deposit Insurance Corp. said.  FDIC Takes Over 2 Western Banks, 1st National Bank Of Nevada, First Heritage Bank In Receivership, Regulators Say Will Reopen.

But there was another press release in the Friday news dump that was little-noticed and barely reported upon by news organizations Silver State Bancorp Announces Director Resignation – MarketWatch:

Silver State Bancorp (SSBX), the holding company for Silver State Bank, announced today that Andrew K. McCain submitted his resignation today as a director on the Boards of Directors of Silver State Bancorp and Silver State Bank, citing personal reasons.

Mr. McCain previously served as a director of Choice Bank in Scottsdale, Arizona from 2006 to April 1, 2008 when Choice Bank merged into Silver State Bank. Mr. McCain had been appointed to the Boards of the Company and Silver State Bank in February, 2008 and had served on the Audit Committee. Mr. McCain has recently been appointed Chairman of the Greater Phoenix Chamber of Commerce, effective this month.

A spokesperson for the Company stated that the Company wishes him the very best in all his present and future endeavors.

That was it.  No further explanation, nor any background information by a curious reporter.  Why did Andrew K. McCain, the son of Senator John McCain, leave the boards of these banks so suddenly?

Thankfully Mark Nickolas at Political Base blog did some background investigation and offers this possible explanation Mark Nickolas’ Blog: 20 Years Later: Another McCain At Center Of Bank Collapse and Government Take-Over?:

"Be mindful that while Silver State Bancorp has not been seized by federal regulators, it isn’t hard to conclude that they’re near the top of the watch list. Just last week, the investment site The Motley Fool listed Silver State as three bank stocks not to buy right now. Last month, fears were raised in another Motley Fool analysis of underperforming loans that showed Silver State in dire straits, and check out how the stock has done over the past year:

Already this morning, Silver State (SSBX) is down another 10 percent.

Here’s what my political gut is telling me: It was pointed out above that Andrew McCain served on the bank’s audit committee — the entity which would know most about the bank’s financial situation and its portfolio of increasingly bad loans. Is McCain fleeing the bank, knowing that federal regulators are likely to seize it in short order and did not want his name attached to a collapsing bank right in the middle of a presidential race where his dad is the trailing nominee and whose own political history is soiled with unethical actions involving a bank collapse during the last great banking crisis?

Shockingly — or not — the traditional media hasn’t yet touched this development, that I’ve seen. But let’s keep a very close eye on developments. It might again prove the saying that the apple doesn’t fall far from the tree…"

Maybe one of our local yokel political reporters, typically card-carrying members of "The John McCain Protection Society," will become curious enough to ask Andrew K. McCain, the newly appointed Chairman of the Greater Phoenix Chamber of Commerce, impolitic questions about the real reasons behind his sudden departure from the Boards of Directors of Silver State Bancorp and Silver State Bank.  "Personal reasons" is a classic dodge, and is always an indicator that there is much more behind the story than meets the eye.  Is it too much to ask that reporters actually do their job?

As Mark Nickolas reminds us in his report, it was almost exactly 20 years ago that John McCain was embroiled in his own bank collapse scandal.

"[F]ederal regulators seized Lincoln Savings and Loan Association of Irvine, California. The takeover took place more than a year after five United States senators had tried to hold-off a government investigation by the Federal Home Loan Bank Board into Lincoln’s risky loan practices regarding home loans.

Those five senators included Sen. John McCain (R-AZ) and the chairman of Lincoln was Charles Keating — who was not only a top McCain donor but was Cindy McCain’s business partner in a real estate deal in Arizona (as I detailed earlier this year). This scandal — known as The Keating 5 — remains an albatross for McCain’s political career.

As a result of Lincoln’s collapse, American taxpayers lost more than $2 billion on the bailout and more than 21,000 mostly elderly investors lost their life savings as a result of bankruptcy of Lincoln’s parent company.

In 1991, the Senate Ethics Committee rebuked McCain, finding that he had "exercised poor judgment in intervening with the regulators." The net effect of the actions of the Keating 5 senators was to prevent federal regulations from intervening a year earlier and limiting the amount of exposure to taxpayers and investors."

Update 7/31/2008:  The Arizona Republic has made a first attempt to follow up on this story McCain son resigns from Nev.-based bank board (by Russ Wiles – Jul. 30, 2008 06:39 PM).  A Silver State spokesman declined to comment on the resignation. McCain didn’t return return phone calls.