Martha’s Vineyard Savings Bank, with assets in excess of a half billion dollars, net earnings approaching four million dollars and a new, experienced community banker firmly at the helm seems to be on a solid course.
The bank clearly stumbled last year, but the extent, nature and impact of whatever improprieties occurred are still frustratingly unclear.
Ironically, the reason for the lack of transparency lies not with savings bank officials but with the Federal Deposit Insurance Corporation, the very agency charged with maintaining public confidence in the community banking system.
What we know is that former bank president Christopher Wells, who had presided over a period of growth and prosperity at the bank, resigned abruptly in May 2012. In February, the FDIC issued an order — made public just last week — that permanently barred Mr. Wells from working in banking. The order is written with a legalistic broadness that could describe a multitude of potential sins. According to the order, Mr. Wells “engaged and/or participated in violations of law and/or regulations, unsafe or unsound banking practices and/or breaches of fiduciary duty as an institution-affiliated party of Martha’s Vineyard Savings Bank.” In conversations with the Gazette last week, bank officials repeatedly said they were prohibited by law from answering questions about what occurred.
In a statement provided exclusively to the Gazette this week, Mr. Wells defends his integrity and leadership during his eight years at the helm of the Island’s largest bank. Without providing detail about the allegations against him, he claims the bank suffered no harm and no losses as a result of his alleged wrongdoing. An FDIC spokesman refused to elaborate on what was written in the order, saying the agency cannot comment on enforcement orders or bank examinations.
There is no indication that Mr. Wells personally profited from whatever he did, and the evidence suggests that the FDIC’s investigation was related to loans that did not meet federal guidelines. Last year, the bank wrote off two hundred and forty eight thousand dollars in bad loans, two hundred thousand dollars of which related to a single transaction involving an affordable housing initiative. Was there something worse? We don’t know, but the vague wording of the order against Mr. Wells has invited wild speculation.
If the goal of the FDIC is to build confidence in the bank, publicizing information that is subject to myriad interpretations seems misguided at least.
Martha’s Vineyard Savings Bank was created in November 2007 from the merger of the former Dukes County Savings Bank and the Martha’s Vineyard Cooperative Bank. It quickly became the largest bank on the Island, with assets more than triple those of the next largest, Edgartown National Bank.
The birth of Martha’s Vineyard Savings Bank coincided with heady years for banks generally, and the savings bank grew rapidly. At the same time, the national mortgage and banking scandals that surfaced in 2008 started bringing new regulatory scrutiny to banks in general.
That the FDIC is taking a closer look at what is going on in banks is theoretically a good thing, but if the agency is not going to let the public know what it finds, all we’ve done is traded our trust in one mysterious bureaucracy for another.