Just a quick post because this poor little old lady’s story reminded me of the cat above:

In 2001, [Fran] Sweet says she put her life savings of nearly $600,000 into accounts at Superior Bank of Hinsdale, Ill. About a month later, the Federal Deposit Insurance Corp. seized Superior because of alleged improper financial and accounting practices related to its subprime business. Much of her money, along with deposits of hundreds of other Superior customers, was frozen because it exceeded the $100,000 limit on FDIC insurance at the time. Since then, the FDIC has been making periodic payments to such depositors to cover some of their losses.

Okay, so she had $600K in one bank, which is fail (on her part for not breaking it up into accounts and probably on Superior’s part for not advising her as such). But it’s been eight years, so her frozen assets should’ve been trickled back to her by now, right?

Well, no. FDIC is too busy using Superior’s funds to repay a settlement over some fail mortgages they had allegedly represented:

Earlier this year, FDIC officials told Ms. Sweet her payments had been interrupted, she says. The reason: The agency needed any available Superior-related funds to pay off a $90 million lawsuit settlement with Beal Bank. The Plano, Texas, bank had accused the FDIC of misleading it about the quality of a portfolio of Superior mortgages bought from the agency for $340 million. Beal alleged some of the loans were made with fraudulent appraisals or inaccurate information about a borrower’s income. Many of the loans were made after the FDIC took over Superior. The lawsuit was the subject of a page-one article in The Wall Street Journal last year.

The FDIC didn’t acknowledge wrongdoing in the Beal suit and has said it acted in good faith in its dealings with the bank. An FDIC spokesman says Superior-related funds had to be used to pay the Beal settlement because the litigation is related to the collapsed bank’s loans. The spokesman didn’t say when payments to depositors might resume.

At least one person has died in the interim. The article also goes into detail about the nice people who tanked this bank, and why there should have been enough money to actually reimburse people like Fran:

Superior came into being in the late 1980s, when the Chicago-based Pritzker family partnered with a New York real-estate developer to take over a troubled Illinois thrift with hundreds of millions of dollars of federal aid. Penny Pritzker, finance chair of President Obama’s 2008 election campaign and now a member of his Economic Recovery Advisory Board, served as Superior’s chairman for a time.

For years, Superior reported healthy profits and paid nearly $200 million in dividends to its owners. But the profits came through “flawed” accounting, while the dividends were made “without regard to the deteriorating” condition of Superior, according to a 2002 report by the FDIC. Several months after Superior’s collapse, the Pritzkers, without admitting wrongdoing, agreed to pay $100 million to the FDIC immediately and another $360 million over 15 years. Some of that money has been going to reimburse depositors.

Given the Pritzkers’ wealth and role at Superior, the FDIC should have insisted on provisions to ensure prompt repayment of uninsured depositors, says Timothy Anderson, a retired bank consultant who has followed the Superior case.

Heh… amusing that someone with a legacy of spewing out money despite a deteriorating balance sheet would find a place in government! At any rate, we hope Fran isn’t having to eat cat food because the FDIC is busy paying out a settlement on crap mortgages. And at the rate these fails are going, we hope they get around to paying Fran before 2019.