FDIC to let lease expire on temporary Irvine office, a sign of an improving economy
The FDIC took out insurance of sorts two years ago when it opened a Southern California satellite office to house hundreds of temporary employees and contractors handling failed banks in the western U.S.
Tacked onto the Federal Deposit Insurance Corp.'s three-year rental agreement was an option to extend the lease on the office building in Irvine for two more years.
Now it seems the option won't be needed -- an indication the federal agency's worst-case scenario for bank failures won't be coming true in this improving economy.
In an announcement Friday, the FDIC said it would shut down the office near the Irvine Spectrum Center mall when the lease runs out on Jan. 13, 2012.
It's likely that additional satellite offices in Jacksonville, Fla., and Schaumburg, Ill., also will be closed when their leases run out, the FDIC said.
The announcement thanked the employees in the Irvine office for so far handling 94 resolutions -- the FDIC's phrase for getting banks reopened under management considered more sound.
In California, the rash of failures began with IndyMac Bank, a Pasadena mortgage lender that collapsed after a bank run in July 2008.
Counting that failure, 35 banks in California have been shut down by regulators through Friday, when Canyon National Bank in Palm Springs became the latest to fail.
RBC Capital Markets -- reflecting on the banks it researches in the western United States -- last week said fundamentals were improving, with more than two-thirds of the banks posting profits. About half the banks beat analysts' estimates, RBC said. But it warned that the industry was not expected to settle back to "normalized" earnings levels until 2013 or 2014.
-- E. Scott Reckard
Photo: FDIC Chairwoman Sheila Bair. Credit: Jay Mallin / Bloomberg News