Business as usual at Downey Savings
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The Downey Savings & Loan branch in Burbank seemed to be doing business as usual today under its new ownership: Minneapolis-based U.S. Bank.
Federal regulators seized Newport Beach-based Downey and PFF Bank & Trust late Friday, the latest in a series of banking failures stemming from the housing slump and mortgage meltdown.
Traffic was light at the Downey brank in Burbank mid-morning, with fewer than ten customers over the space of an hour. At one point, a woman in a red shirt and black cap went into the branch and emerged a few minutes later clutching a large roll of cash before dashing across the street to McDonald’s.
The Office of Thrift Supervision took over Downey Savings & Loan and PFF, short for Pomona First Federal, at the close of business Friday and promptly handed the banks over to the Federal Deposit Insurance Corp. From there, U.S. Bank agreed to acquire all assets and assume all deposits from the troubled thrifts.
Inside the Downey branch on Monday, two fliers from US Bank gave “A Warm Welcome to Downey Savings Customers” and promised that “The future looks brighter with US.”
The sheets touted the “prudent approach to banking, strong balance sheet and solid capital position” of U.S. Bank, a unit of US Bancorp. Customers were assured that they would continue to have access to all the accounts they held with Downey, and that they would still be served by the same bankers at the same offices.
Downey’s downfall began when the bank “got too big for its britches” and tried to join major banks that were the offering toxic mortgage loans, according to Richard Lee McWilliams, 78, of Burbank, who was pulling cash out of the branch ATM.
The retiree, who used to overhaul aircraft engines, has banked with Downey for more than 20 years, but said he and his wife now plan to shift what’s left in their checking accounts to a credit union in Burbank.
“I thought Downey was a homely, nice little place, where they used to know my name whenever I walked in,” McWilliams said. “But then they went cuckoo.”
“I feel sorry for the other Downey customers, for anybody connected with the wrong bank now,” McWilliams said. “What Downey did is wrong, but everyone was doing it, so they joined in. And they got away with it for a while, but it jumped back and bit them in the ear.”
McWilliams said his regard for the bank was damaged two years ago, when the bank’s loan department tried to get him to refinance his home. Doing so would have forced him to ultimately make sharply higher payments, he said, and he moved most of his money out of the bank at that time.
--Tiffany Hsu
