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Feds take over $20M Irwin pension shortfall

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The federal Pension Benefit Guaranty Corp. will cover nearly all of a $20.5 million shortfall in the pension plan covering more than 1,000 former workers and retirees of Irwin Financial Corp., the failed Columbus, Ind., banking company.

Irwin is the parent of Irwin Union Bank, the only Indiana bank to be seized by government regulators since the financial crisis began in 2008. The Federal Deposit Insurance Corp. in September shut down Irwin and sold most of its operations to Cincinnati-based First Financial Corp.

The PBGC estimates that Irwin’s pension plan is 56 percent funded, with assets of $26.7 million to cover $47.2 million in benefit liabilities. The agency expects to be responsible for $19.1 million of the $20.5 million shortfall.

Banking experts say Irwin was unable to recover from massive losses spurred by a nationwide expansion of its home equity loan business over the past decade. Irwin Union Bank was founded in 1871 and was one of the state’s oldest financial institutions.

Its parent, Irwin Financial, is being liquididated in Indianapolis bankruptcy court.

 

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  • Clawback
    Perhaps, the government should consider claw backs of officer pay or attach their personal assets to cover this shortfall.

    Management should have fully funded this liability instead before paying themselves.

    Business operators would never fail to pay their water and electric bills but defer funding retirement liabilities at will. It should be a criminal offense to allow pension liability to accrue without adequate funding.

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  1. I'm a CPA who works with a wide range of companies (through my firm K.B.Parrish & Co.); however, we work with quite a few car dealerships, so I'm fairly interested in Fatwin (mentioned in the article). Does anyone have much information on that, or a link to such information? Thanks.

  2. Historically high long-term unemployment, unprecedented labor market slack and the loss of human capital should not be accepted as "the economy at work [and] what is supposed to happen" and is certainly not raising wages in Indiana. See Chicago Fed Reserve: goo.gl/IJ4JhQ Also, here's our research on Work Sharing and our support testimony at yesterday's hearing: goo.gl/NhC9W4

  3. I am always curious why teachers don't believe in accountability. It's the only profession in the world that things they are better than everyone else. It's really a shame.

  4. It's not often in Indiana that people from both major political parties and from both labor and business groups come together to endorse a proposal. I really think this is going to help create a more flexible labor force, which is what businesses claim to need, while also reducing outright layoffs, and mitigating the impact of salary/wage reductions, both of which have been highlighted as important issues affecting Hoosier workers. Like many other public policies, I'm sure that this one will, over time, be tweaked and changed as needed to meet Indiana's needs. But when you have such broad agreement, why not give this a try?

  5. I could not agree more with Ben's statement. Every time I look at my unemployment insurance rate, "irritated" hardly describes my sentiment. We are talking about a surplus of funds, and possibly refunding that, why, so we can say we did it and get a notch in our political belt? This is real money, to real companies, large and small. The impact is felt across the board; in the spending of the company, the hiring (or lack thereof due to higher insurance costs), as well as in the personal spending of the owners of a smaller company.

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