Tuesday, November 25, 2008 at 6:57 PM
Cleveland's AmTrust bank says its plan for complying with a Federal regulator's order to improve its financial standing will include job cuts. Ideastream's Kymberli Hagelberg has this report.
Last week the Office of Thrift Supervision, the federal agency that inspects and regulates savings and loans, ordered AmTrust not to take on any more loans or issue lines of credit involving land acquisition and speculative construction. It said, among other things, that the bank engaged in unsafe and unsound banking practices, and didn’t have enough capital on hand to cover potential losses.
In a written statement, AmTrust spokeswoman Donna Winfield said the bank is complying with the requirements, and that will include some reductions-in-force. She declined to elaborate.
Raj Aggarwal is dean of the University of Akron Business School. He says it’s hard to tell exactly what AmTrust did to get into regulatory trouble. But, he says, the bank is a small player in the Cleveland market, and its demise or sale wouldn’t have nearly the effect of the impending sale of National City.
Aggarwal: “There may be a few job losses associated with the bank, not just in terms of people that work at AmTrust, but maybe some secondary job losses. Most of the companies that got financing from Amtrust will probably get financing at other banking institutions but given the environmental conditions today, that may be not as easy as in the past.”
Janet Frank of the OTS says its order was issued after red flags showed up in AmTrust’s regular inspections, which occur for all savings and loans every 12 to 18 months.
AmTrust has until Sunday to submit a plan to federal regulators.
Economy, Regional Economy/Business - News, Other, Community/Human Interest
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