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When directors and their banks get too close

WICHITA — The Charlotte Observer has a fascinating story today about what happens when members of a bank’s board of directors get too close to a bank whose interest they are supposed to be watching out for.

Of $5 million in loans this director took out from the bank, $3.2 million of the loans turned sour.

And the bank’s failure cost the Federal Deposit Insurance Corp.’s deposit insurance fund $131 million.

I’m not implying that this director’s action caused the bank to fail. But there clearly was little oversight by the board.