So a friend of mine called me up this morning to state that his bank went under. Seems that Office of Thrift Supervision yesterday closed NetBank, the first Internet only bank. The FDIC was named the receiver, and the remaining deposits are being moved to ING Direct. "They had significant problems with respect to loan underwriting, poor documentation, and a high amount of early payment defaults," OTS spokesman Kevin Petrasic said. That's a polite way of saying that they had, amongst other issues, problems with subprime mortgages.
Now I hadn't heard of a bank failure occurring since the Great Depression, but having looked at the FDIC's Bank Failues and Assistance, there have been several, including one as recent as February 2, 2007. NetBank, however, is the largest of recent times.
Is this the first symptom of what is to come due to the subprime mortgage debacle?