Inside a not-bailed-out bank

By Felix Salmon
March 22, 2010
Aaron Elstein:

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People have many legitimate reasons to have a grievance against their bank. In fact, it’s rare to find someone who hasn’t been extremely angry at their bank at some point. But rarely is there a case as clear-cut as this one, from Aaron Elstein:

Last November, Martin Cadillac, a prominent New York area car dealer, sued Mr. Antonucci and Park Avenue Bank, claiming the bank made “extortionate demands” and engaged in “predatory lending.”

Martin Cadillac alleges that Mr. Antonucci threatened to terminate its credit line, which would have put the dealer out of business, unless it agreed to provide cars to the bank and members of Mr. Antonucci’s family. The dealer gave Mr. Antonucci’s son a $33,000 Land Rover for no charge, two Cadillac SRXs worth around $50,000 each to his wife, and a $75,000 Cadillac Escalade to the bank, according to court documents…

The feds say they began investigating Mr. Antonucci last October, and he resigned as CEO the same month. Earlier this month, regulators seized Park Avenue Bank and transferred its accounts to Valley National Bank.

A banker has a huge amount of power over his borrowers: he can end their credit line and their banking relationship at any time, and since it takes a long time to build up that kind of trust and relationship, such an action can mean the business is forced to fail. If these allegations have any truth to them, Antonucci deserves to go away for a very long time indeed.

Antonucci stands out for another reason, too: he’s one of the very few bankers who was so far beyond the pale that Treasury wouldn’t even give him the $11.3 million of TARP funds that he asked for. It seems that the bailout machine wasn’t completely a rubber stamp, after all.

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