Saturday, September 29, 2007

Government shuts down NetBank

Mortgage defaults cited as FDIC named receiver, ING takes over deposits

WASHINGTON - NetBank Inc., an online bank with $2.5 billion in assets, was shut down by the government on Friday because of an excessive level of mortgage defaults.

It was the largest savings and loan failure since the tail end of the industry's crisis more than 14 years ago. Federal regulators appointed the Federal Deposit Insurance Corp. as a receiver for Alpharetta, Ga.-based NetBank.


The FDIC said NetBank had $2.5 billion in total assets and $2.3 billion in deposits as of June 30.

The FDIC insures bank deposits of up to $100,000.

NetBank had $109 million in deposit accounts that exceeded the FDIC limit. Those customers will become creditors in NetBank's receivership, the FDIC said.

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