Saturday, February 16, 2013
Pastor-run Covenant Bank fails in Chicago
Covenant Bank, the small West Side lender run by mega-church pastor Bill Winston, was closed late Friday by bank regulators, wiping out the investments of more than 3,000 members of Rev. Winston's Forest Park church.
Liberty Bank & Trust Co., an African-American-owned bank in New Orleans, assumed $58 million in Covenant Bank assets and $54 million in deposits, the Federal Deposit Insurance Corp. announced.
The failure brings to a bad end the $3 million acquisition more than four years ago of the former Community Bank of Lawndale by the group led by Rev. Winston, with much of the cash supplied by members of his 20,000-member congregation, Living Word Christian Center.
Rev. Winston long had sought a bank to help put to the test his stated belief that godly pursuits lead to financial success. He hoped ownership of the lender would help revitalize neighborhoods like Lawndale on the West Side, where the bank was based.
But the bank embarked on a lending spree as the financial crisis and resulting recession hit. Its loans quickly soured, depleting capital levels. An effort to find investors to rescue the bank proved unsuccessful.
The FDIC estimated Covenant's failure would cost its insurance fund $21.8 million. Covenant is the 42nd Chicago-area bank to fail since the beginning of 2009.
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The congregation who were also the shareholders (3000 of them) lost their investment. This was a case of very poor management by those in charge as discussed in the FDIC Consent Order of 2011 which did provide for time to correct the issues. These church goers wanted to believe so they drank the Kool-Aid and gave their money. Rev Bill Winston now has new material..."Fleecing The Flock" "When is my Willie Slick" all leading into American Creed on CNBC TV.
ReplyDeleteupdate Rev Winston Bank fiasco...In an effort to help the many who lost their savings by investing in Covenant Bank Living Word Ministries is hosting a relief concert featuring The Soggy Bottom Boys. Playing their many favorites "I'm In the Jailhouse Now" (thats a personal favorite of Rev Winston) "I am a Man of Constant Sorrow" and many more songs of salvation. Check with the Church for the time and place.
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