Penn Square Bank is a small commercial bank located in Oklahoma City, Oklahoma that failed in July 1982. The bank makes large amounts of unencrypted energy-related loans sold to other banks. Losses on these loans caused significant financial problems for some of the banks.
The bank was founded in 1960 and is located behind Penn Square Mall in Oklahoma City. The bank made its name in high-risk energy lending during the late 1970s and early 1980s Oklahoma and Texas oil explosions. Between 1974 and 1982, bank assets increased more than 15 times to $ 525 million and deposits swelled from $ 29 million to over $ 450 million. As a result of irresponsible lending practices in connection with the sale of more than $ 1 billion in "participation loans" to other banks across America, Penn Square Bank failed in July 1982. Unlike most previous bank failures since the Federal Deposit Insurance Corporation ( FDIC) is formed, the uninsured depositors suffer losses because no other banks are willing to assume deposits. Since most deposits come from other financial institutions and represent high interest jumbo certificates that are largely uninsured, this is a huge loss to depositors. Investigation by the FDIC after the bank's failure revealed 451 possible criminal offenses.
The bank is often cited as part responsible for the fall of the Continental Illinois National Bank and Trust Company of Chicago, which must dilute about US $ 500 million in loans purchased from Penn Square. In addition, there were major losses at other banks, including the First National Bank of Seattle, Michigan National Bank, and Chase Manhattan Bank in New York (Seattle First and Continental Illinois finally acquired by Bank of America predecessor BankAmerica; former in 1983 and last year 1994). The collapse of the bank coincided with a glut of oil in the 1980s and Penn Square was the first of 139 Oklahoma banks that failed in the 1980s. Bankruptcy is the subject of two bestsellers and led to a two-year prison term for bank energy lender Bill Patterson.
Abilene National Bank in Abilene, Texas did a banking correspondence with Penn Square Bank. Abilene National Bank then became Mbank then Bank One then JPMorgan Chase bank.
Video Penn Square Bank
Penn Square Alumni
- Bill P. (Beep) Jennings (b.1923, d. 2003)
- William G. "Bill" Patterson
- Laurence Francis Rooney Jr. (born 1925, d 1980)
- Richard C. Haugland
- William Eugene Rowsey III
Maps Penn Square Bank
References
Further reading
- Hightower, Michael J., "Penn Square: The Shocking Center World Bank, Part I - Boom," Chronicles of Oklahoma, 90 (2012), 68-99.
- Hightower, Michael J., "Penn Square: The Shocking Central Bank of the World, Part 2; Bust," Chronicles of Oklahoma, 90 (2012), 204-36.
- Zweig, Phillip L., "Belly Up: The Collapse of Penn Square Bank" (1985) Crown Publishers ISBNÃ, 9780517557082
- Singer, Mark, "Funny Money" (1985) Knopf ISBNÃ, 9780394532363
External links
- FDIC history of Penn Square Bank failure
- New York Times article - 'MICKEY MOUSE IN OKLAHOMA'
- PENN SQUARE BANK FAILURE; LISTENING PREVIOUS COMMITTEE IN BANKING, FINANCIAL AND URBAN; HOUSE OF REPRESENTATIVES; KONGRES NINETY-SEVENTH; SECOND SESSION; SECTION 1; JULY 15; AND AUGUST 16, 1982 [1]
- PENN SQUARE BANK FAILURE; LISTENING PREVIOUS COMMITTEE IN BANKING, FINANCIAL AND URBAN; HOUSE OF REPRESENTATIVES; KONGRES NINETY-SEVENTH; SECOND SESSION; SECTION 2; SEPTEMBER 29 AND 30, 1982 [2]
- FAILED PENN SQUARE BANK; LISTENING BEFORE THE COMMITTEE ON BANKING, HOUSING, AND URBAN AREA; UNITED STATES SENATE NINETY-SEVENTH CONGRESS; SECOND SESSION; 10 DECEMBER 1982 [3]
- "Breaking the Bank" OETA Television; May 5, 2016 [4]
Source of the article : Wikipedia
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