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A failed bank and a failed story

I spent my Monday morning in Germantown, outside the last local branch of Waterfield Bank, trying not to look too pitiful. The bank was taken over by federal regulators in early March and on Monday, the branch was closing for good. I arrived intending to write a story about the last day of a failed bank, but ran into a major obstacle when the person I most needed to speak with, the lone remaining employee, politely turned me down.

It was too bad because Waterfield's closure had the makings of a good story, another piece of the nation's economic meltdown in our backyard, even though some aspects of Waterfield's closure were far from typical.

Of the 40-odd banks that have failed so far this year, only a handful closed without being able to find a buyer for their assets and deposits, as banking expert Bert Ely explained to me. No one ended up buying Waterfield because it was, in his words, "an oddball bank," that would likely be hard for a more traditional bank to absorb.

Waterfield started as an online bank in mid-1990s back when people thought the Internet would kill off branch banking. Its founders were a pair of brothers who hailed from a prominent Hoosier banking family that exited the mortgage business several years ago because of the housing meltdown.

In 2008, the Waterfield brothers bought American Partners Bank and its Germantown branch with the intention of expanding into the Washington area. The idea was to attract clients especially among trade associations and other such organizations. Its clients included the Teamsters and AARP Financial. At one point, it hired a local banker, Malcolm Hollensteiner, the son of former White House social secretary Letitia Baldrige. Hollensteiner is now suing Waterfield.

The housing market's collapse contributed to Waterfield's downfall. The bank made some bad loans, but filings by federal regulators suggest larger losses from securities backed by mortgages did them in. Regulators had warned the bank last fall that it didn't have enough money set aside to cover potential losses.

By the time I arrived Monday morning, I'd already made efforts to contact the Waterfield brothers, Hollensteiner, and a board member who was quoted in an Indianapolis paper saying the bank was perfectly healthy when it was sold in 2008. But I hadn't heard back from any of them at that point.

Waterfield occupied a lovely storefront in Germantown, in the heart of a town center development, next to a Panera Bread and across from a new library. Except for a piece of paper taped to the ATM outside announcing that the machine was no longer in service, a passerby wouldn't know she was staring at the remains of a bank implosion.

There was quite a bit of foot traffic around the bank but no anxious depositors hovering outside. I wasn't really expecting any since folks have had a month to withdraw their money. I was more interested in the employees. When I peered through the windows, I saw only three people. They turned out to be the branch manager, an official from the Federal Deposit Insurance Corporation, and a security guard. I was hoping to find out what their last day duties consisted of, whether any depositors would show up to collect their money, whether the manager had found another job, what happened to the other employees, etc. And I wanted to be there when she locked up for the last time.

I had already been warned by FDIC spokesman David Barr that I was not allowed to go inside the bank or interview anyone in there and that it was up to the manager whether she wanted to talk to me outside. I felt, though, that the manager ought to know who I was and why I was lurking outside, so I approached the door. The branch manager, a petite woman with short hair and eyeglasses, probably thinking I was a customer, unlocked the door and let me inside. I explained why I was there and she said she wasn't interested in talking, thanked me for coming and opened the door to let me out.

Plan B in these situations is to park myself outside and try to approach her again when leaves for lunch or coffee. But as the day wore on, my editor and I decided without being able to spend more quality time with the manager during the course of the day or at least a complete recounting of it, there wasn't going to be enough material for a story that really captured the experience of shutting down a bank.

Monday was not a total loss. My daughter's preschool was closed and my husband who writes about local sports for a living, had planned on watching her during the day. But then Donovan McNabb had to go sign with the Redskins. That, combined with Nats opening day and the Caps game, meant Monday had become, to use his breathless phrase, "the busiest day in D.C. sports history." Translation: "Honey, I need to work."

I would still like to write about a bank closing and I would love to get suggestions on other ways to go about it. The bar was set extremely high by a piece about a bank takeover done by NPR's Chana Joffe-Walt. And next time, I will make sure to have back-up child care!

By Annys Shin  | April 6, 2010; 10:05 AM ET
Categories:  Assignment Editor, The inside story  
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I have lived in Germantown for almost 12 years and usually shop in the location you described. However I have never heard of a Waterfield bank. Maybe that was part of their problem???

Posted by: mcteddy | April 6, 2010 8:33 PM | Report abuse

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