Inside the Money Club

The FDIC report on the First NBC collapse is out. The Advocate doesn't report anything especially juicy although they point out that it does confirm key elements of their prior reporting on the story.

If you've been following along, you will have already understood that the central issue here is Ashton Ryan and his friends were passing out free money to each other.

While focusing much of its criticism on First NBC's founder and CEO, Ashton Ryan Jr., the report also deplores a lack of oversight by the bank's board as well as by federal and state regulators.

Based on years of confidential bank examination reports, which rarely become public, the FDIC report also notes an unusual transaction that smacks of a conflict: a $2 million loan to Ryan from a First NBC customer who had recently obtained a $9 million unsecured loan from the bank.

Ryan, a former partner at a Big Five accounting firm, founded First NBC in 2006. It drew a local who's who of backers and grew at a remarkable pace into a nearly $5 billion institution. But the report suggests that the bank's trajectory was lifted partly by its willingness to pay high interest rates for deposits, which were in turn used to make loans that were bigger than many larger banks in the area were willing to take on.

This doesn't go too far into explaining that often the source of the free money was a scheme to shuffle around questionable investments in post katrina disaster recovery grants and tax credits. The larger story we've been reading all year is how the bank became a conduit for turning those funds into windfalls for important people in the political, entrepreneurial, and cultural non-profit circles who own and operate New Orleans nowadays.

It does quote some lawyers pointing out that it's going to be difficult to prove "criminal intent" in all of this. Because, as with most white collar crime, you probably don't have to worry as long as you've been stealing on behalf of the right people.