Southeast Banking Corporation
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Southeast Banking Corporation was a
bank holding company A bank holding company is a company that controls one or more banks, but does not necessarily engage in banking itself. The compound bancorp (''banc''/''bank'' + '' corp ration') or bancorporation is often used to refer to such companies as w ...
based in
Miami, Florida Miami is a East Coast of the United States, coastal city in the U.S. state of Florida and the county seat of Miami-Dade County, Florida, Miami-Dade County in South Florida. It is the core of the Miami metropolitan area, which, with a populat ...
. On Friday, September 19, 1991, during the
savings and loan crisis The savings and loan crisis of the 1980s and 1990s (commonly dubbed the S&L crisis) was the failure of approximately a third of the savings and loan associations (S&Ls or thrifts) in the United States between 1986 and 1995. These thrifts were b ...
, Southeast failed and was seized by the
Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to corporate charter, charter, bank regulation ...
. It was placed into the
receivership In law, receivership is a situation in which an institution or enterprise is held by a receiver – a person "placed in the custodial responsibility for the property of others, including tangible and intangible assets and rights" – especia ...
of the
Federal Deposit Insurance Corporation The Federal Deposit Insurance Corporation (FDIC) is a State-owned enterprises of the United States, United States government corporation supplying deposit insurance to depositors in American commercial banks and savings banks. The FDIC was cr ...
(FDIC), who sold almost all of Southeast's assets to
First Union First Union Corporation was a bank holding company that provided commercial bank, commercial and retail banking services in eleven states in the Eastern United States, eastern U.S. First Union also provided various other financial services, incl ...
. The bank failure is notable since it is one of the first instances of the FDIC liquidating a bank using loss sharing provisions. As a result of several mergers over the next two decades, most of what was once Southeast is now part of
Wells Fargo Wells Fargo & Company is an American multinational financial services company with a significant global presence. The company operates in 35 countries and serves over 70 million customers worldwide. It is a systemically important fi ...
.


History

Southeast was founded as the First National Bank of Miami on December 1, 1902. It was one of only two banks in Miami to survive the
Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
. By 1946, it was the largest bank in Florida. In 1969, the bank changed its name to Southeast Bank. At that time, the bank was led by Charles Zwick, former director of the
Office of Management and Budget The Office of Management and Budget (OMB) is the largest office within the Executive Office of the President of the United States (EOP). The office's most prominent function is to produce the president's budget, while it also examines agency pro ...
during the Presidency of Lyndon B. Johnson. In 1983, it opened a signature 765-foot, 55-story tower in downtown Miami, the
Southeast Financial Center Southeast Financial Center is a two-acre development in Miami, Florida, United States. It consists of a tall office skyscraper and its 15-story parking garage. It was previously known as the Southeast Financial Center (1984–1992), the First U ...
. In 1986, the bank was the 30th largest mortgage banker in the United States. In December 1988, the company acquired First Federal Savings and Loan Association of Jacksonville, an acquisition that turned out to be unprofitable. By 1990, Southeast was rapidly losing market share. It not only had fewer branches than longtime intrastate rivals Barnett Banks of
Jacksonville Jacksonville ( ) is the most populous city proper in the U.S. state of Florida, located on the Atlantic coast of North Florida, northeastern Florida. It is the county seat of Duval County, Florida, Duval County, with which the City of Jacksonv ...
and SunBanks of
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, but had also been passed by a newcomer from
Charlotte, North Carolina Charlotte ( ) is the List of municipalities in North Carolina, most populous city in the U.S. state of North Carolina and the county seat of Mecklenburg County, North Carolina, Mecklenburg County. The population was 874,579 at the 2020 United ...
; First Union. In a state driven by consumer banking and small businesses, Southeast was seen as relying too much on large companies. Amid concerns about its real estate lending and credit administration practices, Southeast entered into a consent decree with the OCC in 1990–91. However, the losses continued to mount. In the first two quarters of 1991, Southeast lost over $255 million, prompting depositors to pull their funds in droves. The bank was unable to obtain private funding to meet its cash needs, and depended on a $568 million loan from the
Federal Reserve Bank of Atlanta The Federal Reserve Bank of Atlanta (informally the Atlanta Fed and the Bank), is the sixth district of the 12 Federal Reserve Banks of the United States and is headquartered in midtown Atlanta, Georgia. The Atlanta Fed covers the U.S. state ...
to stay afloat. It soon became apparent that Southeast could not stay independent. However, the bank was unable to put together a viable plan for "open bank assistance," which allows regulators to rescue an ailing bank without seizing it. On September 19, the Atlanta Fed called its loan. Southeast was unable to pay. The OCC, having determined that Southeast was no longer viable, seized both of Southeast's banking subsidiaries, Southeast Bank N.A. and Southeast Bank of West Florida, and placed them into the receivership of the FDIC. The FDIC then sold almost all of Southeast's assets to First Union. The holding company, Southeast Banking Corporation, filed for
Chapter 7 bankruptcy Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the United States. This is in contrast to bankruptcy under Chapter 11 and Chapter 13, which govern the process of ''re ...
protection the following day. In 2017, the bankruptcy case was finally closed.


References

{{Reflist, 1 Bank failures in the United States Defunct banks of the United States Banks established in 1902 Banks disestablished in 1991 1902 establishments in Florida