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No executive wants the government telling them what to do. But a new analysis of the crash of Irwin Financial Corp. in Columbus makes one question what was going through the head of Chairman Will Miller before the institution last fall became Indiana’s first and only bank to be liquidated during this banking crisis.
The Federal Reserve Bank of Chicago several times in the past decade warned the Columbus bank’s directors and executives that their expertise and controls lagged behind the institution’s explosive growth into commercial lending and home mortgages.
In fact, the Fed’s Office of Inspector General says in the report, warning lights were blinking so brightly that the Chicago Fed should have cracked down. Perhaps the bank could have been saved, the report reasons.
Indeed, the report cites several instances in which warnings apparently were shrugged off.
Here’s how bad things got: Irwin’s assets nearly tripled in the five years ended in 2008, but the bank’s net income actually fell. And the consumer lending business developed a loan program that didn’t require borrowers to verify their incomes.
For other articles on the report and Irwin's downfall, click here.
So, the Fed is kicking itself for not cracking down on Irwin. But what about Miller, the scion of philanthropist and industrialist J. Irwin Miller, who built Cummins into a powerhouse and kept the bank humming all those years? As the fifth generation to run the bank, what was he thinking?
And what about the directors, who in addition to Miller included Dave Goodrich, the former president of Central Indiana Corporate Partnership and former chief of what is now the commercial real estate powerhouse Cassidy Turley; Dayton Molendorp, CEO of One America, the Indianapolis-based insurer; R. David Hoover, Chairman of Ball Corp., the glass jar and aerospace company headquartered in Muncie before it was moved to Colorado.
These are gold-plated names. Yet, the report paints them as something otherwise.
What are you thinking?