No More NetBank

NetBank, an Internet bank based in Alpharetta, Ga., goes belly-up (see Inman News.)

From the Office of Thrift Supervision: "NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies. As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institution’s viability."

It is the second FDIC-insured bank to fail this year, and the first in Georgia to fail since AmTrade International Bank in Atlanta closed on Sept. 30, 2002, according to the FDIC. More details at this FDIC Web site.

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