‘It’s false.?
Those were the first words out of Oxford Bank President Jeff Davidson’s mouth when called for comment Friday morning after The Oakland Press ran an erroneous front-page headline reporting the bank was receiving a federal bailout.
‘This is just flat-out wrong. I am so upset,? he said. ‘We’re not getting any money. This is about deposit insurance. This is paid for by the banks, not by the taxpayers.?
On Thursday, the bank issued a press release to let the public know that it’s participating in the Transaction Account Guarantee Program (TAGP), which is offered through the Federal Deposit Insurance Corporation (FDIC).
‘It was meant to be positive press,? Davidson said. ‘It’s a good thing. This was about letting our customers know their money’s safe no matter where they put it.?
Under the TAGP, Oxford Bank funds in non-interest bearing transaction accounts and Negotiable Order of Withdrawal (NOW) transaction accounts that earn 0.50 percent or less in interest will be fully guaranteed by the FDIC through Dec. 31, 2009 regardless of how much money is in the accounts.
‘The government has extended unlimited insurance (for these types of accounts),? Davidson said. ‘The message to our depositors and our community is their money’s just as safe and insured here and if they’re not sure, give us a call.?
‘Every bank has the option of doing this. The FDIC expects about 80 percent or more of the banks to participate.?
According to Davidson, Oxford Bank currently has about 12,400 accounts, totalling approximately $70 million, that bear no interest or earn 0.50 percent or less.
‘That includes all business and personal checking accounts,? he said.
TAGP coverage is in addition to and separate from the FDIC’s general deposit account insurance, the maximum coverage of which was temporarily increased from $100,000 to $250,000 per depositor back in early October. The basic insurance limit will return to $100,000 on Dec. 31, 2009.
Davidson said the majority of Oxford Bank account holders are already completely covered by the FDIC’s basic insurance limit.
‘The message (about the availability of TAGP coverage) was really for the million-dollar depositors like the municipalities, school districts and the large corporations,? he said. ‘Every dollar they put in (TAGP-qualified accounts) is insured.?
And it’s Oxford Bank, not the taxpayers, who’s paying a premium to provide this additional insurance to its depositors.
Davidson indicated the nearly 125-year-old financial institution is paying 0.1 percent on each dollar in TAGP-qualified accounts that exceed the FDIC insurance limit of $250,000 per depositor.
‘It’s not taxpayer dollars. The bank is paying that out of its earnings,? he said. ‘We’re more than happy to do that to protect our depositors and make them feel good.?
Davidson said he talked to Oakland Press Executive Editor Glenn Gilbert and he apologized for the error in Friday’s paper.
Gilbert told this reporter the story was pulled off the newspaper’s website Friday and a ‘front-page correction? would be printed in Saturday’s edition.
When asked how this happened, Gilbert replied, ‘Why don’t I just send you what we’re running on the front-page tomorrow, I think that will explain.?
The correction read as follows ? ‘The Oxford Bank is not getting bailout money from the federal Troubled Asset Relief Fund as erroneously indicated in a headline in Friday’s editions. It is participating in the Federal Deposit Insurance Corp.’s Transaction Account Guarantee program to provide additional insurance for deposits. The bank pays a fee to participate in the program and is not receiving any taxpayer money.?
In an e-mail he sent out to bank employees Friday morning, Davidson was extremely critical of the Oakland Press and the reporter who wrote the story. He called it ‘creative journalism at its best.?
?(The reporter) did call us (and) he asked, how much money are you getting from the Federal Reserve?? He was told ‘zero.? He was also told what our press release was addressing,? Davidson wrote.
According to Davidson, this wasn’t the first time the Oakland Press has reported misinformation about the bank.
‘The author of this article has reported inaccurate information about Oxford Bank’s condition on three different occasions,? he wrote.
‘I would dispute that,? Gilbert said. ‘I don’t know the details, but all of our stories are based on their news releases and the reporter didn’t write the headline in this case.?
Although the story’s headline read, ‘Oxford Bank, Flagstar get federal bailout,? the word ‘bailout? was never once used in the body of the story.
However, the article’s lead stated “federal authorities are stepping in to help” Oxford Bank.
Federal and state banking regulators were notified about the false news report by Davidson.
‘If he causes a run on this bank, that’s actually a federal felony offense to print lies about federally-insured financial institutions,? he said. ‘I am just livid.?
‘In today’s world, it’s very dangerous (to print misinformation) because it could cause depositors to worry? and in turn empty their accounts, Davidson explained. ‘All (of) the sudden our deposits take a big drop because people think we’re in trouble. That’s what they call a run on the bank when you have a huge deposit loss.?
If there were a sudden run on the bank as a result of the Oakland Press? inaccuracy, Davidson said the independent financial institution could handle it.
‘We have tremendous liquidity sources,? he explained. ‘In other words, we could lose $60 million and it wouldn’t close us.?
Oxford Bank has applied to see if it’s eligible for up to $10 million of the $700 billion in federal bailout money should it ever need any of those dollars.
However, the bank doesn’t expect to hear anything until sometime in January because it’s a non-public bank, which is not governed by U.S. Securities and Exchange Commission guidelines.
‘We don’t get looked at first,? Davidson said. ‘They’re looking at all the public banks first, the Wall Street banks and the big banks.?
Davidson stressed that looking into the bank’s eligibility for federal funds ‘doesn’t mean we will? utilize them.
‘Quite frankly, my board and my management team aren’t counting on it,? he said.
Davidson said the bank has formulated and continues to devise ‘alternative plans? to raise additional capital ‘just in case? it’s needed.