United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2002-02-07 monographic deposited born digital 28 p. GA 1.13:GAO-02-419T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-419T P0b002ee18037b670 f:d02419t DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-02-419T machine generated eng fdlp REPORT GAOREPORTS-GAO-02-419T GAO-02-419T Bank failures Banking regulation Bank management Bank examination Losses Testimony A02745 Shortly after Superior Bank's closure on July 27, 2001, the Federal Deposit Insurance Corporation (FDIC) projected that the failure would result in a $426-$526 million loss to the deposit insurance fund. Superior Bank's business strategy of originating and securing subprime loans on a large scale was associated with the failure. In addition to the concentration in risky assets, the bank failed to properly value and account for the interests that it had retained in pooled home mortgages. Superior's external auditor, Ernst & Young, also failed to detect the improper valuation of Superior's retained interest until the Office of Thrift Supervision (OTS) and FDIC insisted that the issue be reviewed by the auditor's national office. Federal regulators did not identify and act on the bank's problems early enough to prevent a material loss to the deposit insurance fund. OTS, Superior's primary supervisor, was mainly responsible for not acting earlier. FDIC was the first to recognize the problems in late 1998. Both agencies were aware of the substantial concentration of retained interests that Superior held, but the apparently high level of earnings, the apparently adequate capital, and the belief that the management was conservatively managing the institution limited their actions. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-419T/html/GAOREPORTS-GAO-02-419T.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-02-419T/pdf/GAOREPORTS-GAO-02-419T.pdf GAO-02-419T https://www.govinfo.gov/app/details/GAOREPORTS-GAO-02-419T Testimony GAO-02-419T; Bank Regulation: Analysis of the Failure of Superior Bank, FSB, Hinsdale, Illinois; Bank failures Banking regulation Bank management Bank examination Losses