TL;DR: The US Federal Deposit Insurance Corporation (FDIC) recently listed the second failed bank in the COVID-19 pandemic period. The First State Bank of Barboursville, WV, is now officially under FDIC receivership. Most analysts are describing its closure as unrelated to coronavirus, but the list is now being watched more closely than ever as ominous economic numbers continue to pile.
Federal Deposit Insurance Corporation Lists Second Failed Bank
“On Friday, April 3, 2020,” the FDIC explained, “The First State Bank was closed by the West Virginia Division of Financial Institutions. The FDIC was named Receiver. No advance notice is given to the public when a financial institution is closed. MVB Bank, Inc. (MVB Bank) of Fairmont, WV acquired all deposit accounts. All shares of stock were owned by the holding company, which was not involved in this transaction.”
It’s actually the second US bank to fail this year after the Nebraska-based Ericson State Bank closed, was placed under FDIC receivership, and Farmers and Merchants Bank “acquired all deposit accounts and $9.6 million of the assets,” according to the federal bank regulator on Valentine’s Day.
Government bureaucrats are tin-eared almost by definition. They lack any ability to read a room. 350 million people in a #coronavirus panic isn't the best time for a saucy accented schoolmarm, backed by syrupy piano, to tell them to calm down. Good Lord. #bitcoin pic.twitter.com/lfAHvHbozQ
— CoinSpice (@CoinSpice) March 24, 2020
The FDIC is a post-Great Depression reform implemented in the early 1930s to buttress confidence in the American banking system by guaranteeing deposits up a certain amount. Today, it stands at $250,000, but under the US structure of fractional reserve banking, where only a small percentage of an account’s holdings are kept on-site, few analysts believe banks could survive a wide-scale withdrawal run by customers.
In fact, the Federal Deposit Insurance Corporation was so spooked by the specter of such a phenomenon in the wake of coronavirus, its President pushed out a video warning, a public service announcement, pleading with depositors to remain calm and not retreat to hoarding cash on their own (see above). As for the two bank closings, the FDIC tweeted shortly after the most-recent, “This bank failure was not a result of the current health emergency. Financial issues were longstanding,” and pointed followers to a more detailed press release on the matter.
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