Rep. Broun partly owned bank shut by regulators
WASHINGTON -- U.S. Rep. Paul Broun says he had nothing to do with the operation of a Carrollton bank he and his brothers partly owned that failed and was taken over by the federal government in March.
He says he doesn't know exactly why McIntosh Commercial Bank, co-founded by his brother Conway Broun, became insolvent or why state and federal regulators shut it down.
But after an Atlanta Journal-Constitution examination of congressional financial disclosure forms revealed that Broun was an investor in the bank, the Republican congressman from Athens had a very strong opinion about who's to blame: the federal government.
"The federal government is closing these banks down when there is absolutely no reason to do so," he said. "It's just totally wrong."
State and federal regulators on March 26 shut down four-branch McIntosh Commercial and sold its assets to West Point, Ga.-based CharterBank after determining McIntosh was insolvent and unable to pay its debts.
The bank, founded in 2002, lost $28 million over the past two years and had $88 million in troubled loans on its books. The failure was expected to cost the federal Deposit Insurance Fund more than $123 million.
In an interview Thursday, Broun said his brother Conway was a founding director of the bank. An investment trust called Broun Brother's Investments that includes them and a third brother, Michael, was a major investor.
Rep. Broun said he doesn't know how big of a stake the family trust owned in the bank, or exactly how much he lost when the bank failed. But in a congressional financial disclosure form for 2009 , he listed the value of his investment somewhere between $250,001 and $500,000. It is the single-biggest investment he listed.
The loss, he said, was "more than I can afford."
Rep. Broun went on to say he was simply a silent investor in the banking company. His brother Conway, he said, managed the three brothers' investment, and their interest in the bank. Conway Broun has started and sold several banks, according to the congressman.
"He was in the position to make the decisions about it," Broun said.
Broun said he did nothing in his position as a member of Congress to keep the FDIC and the Georgia Department of Banking and Finance from shutting down the bank. He did acknowledge he held a forum for bankers in his district with fellow Republican U.S. Rep. Tom Price of Roswell, a member of the House Banking Committee, prior to McIntosh's closing.
While saying he knew little about McIntosh's operation, Broun in an interview went into deep detail about federal requirements on how banks must value bad real estate loans, and insinuated that overzealous regulators are causing a national economic crisis.
"Sheila Bair [the FDIC's chairman] and the FDIC that's forcing all of this, under the direction of this [Obama] administration, needs to back off and let community banks do what they should be doing," he said.
At the FDIC, a spokeswoman said she couldn't give specifics on the McIntosh closure, but said as with any bank shutdown, the agency was simply doing its job.
"Our job is to protect depositors," said LaJuan Williams-Young. "We don't want depositors to lose any money. And when it comes to an institution that a regulator has deemed insolvent, as soon as that is closed, the safer depositors are."
