So this is how it works….

On Friday, May 1st at 5PM, North Jersey Community Bank acquired the deposits and certain assets of Citizens Community Bank in Ridgewood, New Jersey.  This was the first New Jersey bank failure since the current economic crises started, and demonstrated how the process of winding down a failed institution really works.

First, let me say that working with the FDIC exceeded any expectation that I could ever have had in working with a government entity. The professionalism, focus, preparedness, and team spirit was a site to be seen…

Citizens Community Bank failed after five years of operation due to lax management, improper underwriting of loans, and an inability to integrate the bank into the market in which it was to serve.

Once the destruction of capital reached a critical level, The State Department of Banking, along with the FDIC began the process of putting the bank into receivership. A bid process was established, qualifications were reviewed, bidders were invited to the table, and a successful successor institution was selected. In this particular case, the successor institution was North Jersey Community Bank.

As a strong, stable and growing bank, NJCB was able to capitalize on the unfortunate failure of a neighboring institution, and will bring the same simple plan of taking in deposits, and making loans to people we know, in this new market area, with the same exemplary customer service that we are renowned for.

One bank fails, another gets stronger… The depositors are all made whole, the community gets a better, stronger bank for its businesses and residents, and the FDIC oversees a process that makes it all work, seamlessly, without interruption, and at no cost to the taxpayer. This is how it is suppose to work…

However, this is very much in contrast with what we are experiencing every day recently with the “Too big to fail” institutions that are so unwieldy that the FDIC, or any other government entity for that matter are unable to manage the failure of.

Let’s make sure that we do what is necessary to return our financial system to one where the regulators can regulate, the shareholders bear the risk, as well as the rewards, and failure is not something that requires the intervention of the will of the American people, but rather an accepted outcome for poor decisions and excessive risk taking., Let’s return to a capitalist system that encourages, supports, and allows for the entrepreneurial spirit that has made this country great…

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