Georgia politicians can sometimes talk a good game.
They complain a lot about federal interference and unfunded mandates from Washington (even as they more quietly accept billions in federal stimulus money). They talk about the Tenth Amendment and states’ rights and state sovereignty. Last week, the Georgia Senate approved a bill making it illegal for any state employee to implement any part of the federal health-reform law without a prior vote of approval by the Legislature.
Meanwhile, two more Georgia banks were ordered closed on Friday, raising the state’s total for 2010 to seven. Since Jan. 1, 2009, 32 Georgia banks have been closed by the Federal Deposit Insurance Corporation, easily the highest total in the nation.
This week’s victims were Unity National Bank of Cartersville, which was closed at a cost to the FDIC of $67.2 million, and McIntosh Commercial Bank of Carrollton, shuttered at a cost of 123.3 million. Like many of the closed banks, McIntosh was a state-chartered institution, meaning that state regulators had a primary role in ensuring that it remained viable.
Clearly they failed, as did the federal regulators with whom they shared that duty. But the federal government has at least acknowledged its failure, studied its mistakes and is attempting to correct them. Congress has held hearing, inspectors general have performed post mortems, and last week the FDIC named a new director, Thomas J. Dujenksi, to head its Atlanta regional operations.
“He’s well-known, well thought of, tough as nails,” said Byron Richardson, an Atlanta banking consultant.
“He’s no-nonsense, by the book,” Richardson said. “When you go in there with a proposal, you better have all your T’s crossed, all the I’s dotted. You better be able to answer any question. He’s a one-man tribunal.”
Dujenski succeeds Mark Schmidt, who moved to the FDIC’s Washington office last year amid a shakeup that saw several top Atlanta regional managers move to other FDIC offices.
Yet neither the state Senate nor House banking committee has shown even the slightest bit of curiosity about why Georgia banks are in such trouble, how state regulators failed in their duty to protect taxpayers and investors or whether tighter state rules or laws are needed to prevent such failures.
Legislators have abdicated their oversight duties, largely because they would not like the answers they would probably find. The revelations might force them to hire more regulators and give them more authority and tighten rules, none of which they want to do. They’ll leave all that dirty work to the feds, even as they complain about federal intervention.