Wednesday, February 28, 2024
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Lecture to review banking scandal

The Reedville Fishermen’s Museum 2017 Winter/Spring Lecture Series will continue April 3 with Robert Pasley’s description of his recent book Anatomy of a Banking Scandal – The Keystone Bank Failure – Harbinger of the 2008 Financial Crisis.

The lecture will begin at 7 p.m. at Festival Halle, 177 Main Street, Reedville.

Pasley worked at the Office of the Comptroller of the Currency for 30 years as an attorney, a senior attorney and an assistant director of the Enforcement and Compliance Division. He is now an attorney and consultant handling bank regulatory matters and anti-money laundering cases, reported lecture chairman Betty Gasper.

In the early 1990s, the First National Bank of Keystone in West Virginia began buying and securitizing subprime mortgages from all over the country and quickly grew from a tiny bank with just $100 million in assets to over $1.1 billion. For three years, it was listed as the most profitable large community bank in the country. It was all a fraud.

All of the securitization deals the bank entered into lost money. To hide that fact, bank insiders started cooking the books and concealing that they were also embezzling millions of dollars from the bank. This was all hidden from the bank’s attorneys and auditors, federal bank examiners and even the board of directors of the bank. To keep the examiners at bay, the bank insiders did everything possible to avoid giving them access to documents they were entitled to see, documents they knew would sink their scheme. The head of the bank even went so far as to bury four large truckloads of documents in a ditch on her ranch.

Pasley explores the failure of the First National Bank of Keystone, the intrigue involved and the lessons that could have been learned—and still can be learned—about how banks operate, how federal banking regulators supervise financial institutions, how agencies interact with one another and how such failures can be avoided in the future.

There will be a book signing after a question and answer period, said Gasper. The museum requests a $5 donation. Light refreshments will be served.

The lecture series is held at 7 p.m. on first Mondays through May and corresponds with the monthly fried chicken dinner hosted by the American Legion No. 117 from 5 to 6:30 p.m. next door.

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