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FBI Searches Doral Bank Offices - Future of Doral Direct?


Doral Financial offices in Puerto Rico were raided on Tuesday by the FBI as part of an investigation involving the bank. The FBI didn’t comment on the raid or on the investigation. The New York Times has more details of the raid.

It’s another sign of troubles from Doral Bank. This NYT article has a history of the troubles that Doral Bank has experienced. The bank has been hurt by past management fraud and a weak Puerto Rican economy. The bank is still having financial problems, and it’s currently operating under a prompt corrective action (PCA) from the FDIC requiring the bank to submit a capital restoration plan. The NYT reported that the bank has recently received notice from the FDIC that its capital restoration plan was inadequate and must be resubmitted. Doral Bank has a financial health grade of an "F" at based on September 2014 data.

Thanks to DA member paulaj who reported on this news in the DA forum. As he mentioned, "while the failure of these banking institutions may or may not be imminent, this raid is a good reminder to stay within FDIC insurance limits at all times."

Most of the Doral Bank branches are located in Puerto Rico, but Doral also has branches in New York City and in the Florida Panhandle. It also operates the internet bank Doral Direct. The bank has different websites and offers different rates for each region. It also offer different rates at Doral Direct. Its NYC rates have long been very competitive. It’s interesting to note that most of Doral Direct’s rates are much lower, and they all are just below the FDIC rate caps. The FDIC requires banks that are categorized as "less than well capitalized" to maintain deposit rates below these rate caps. I’m not sure why Doral Bank NY rates are above these rate caps.

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Anonymous   |     |   Comment #1
Most of Doral bank capital is tided up on PR bonds, which at the moment are not liquid, unless you want to sell them at a 60% discount. This happened after S&P downgraded PR debt as junk. There is no solution for Doral Bank, unless someone buys those bonds from them and release the capital to satisfy the FDIC rules.
Anonymous   |     |   Comment #2
The solution is new owners and the normal FDIC guarantees of no losses on retained assets that the FDIC does not take over.
Anonymous   |     |   Comment #7
I remember reading a while ago that the FDIC does not cover fraud?
Anonymous   |     |   Comment #8
They should ask FED's Yellen to buy those bonds at face value or get a guatanty loan against them and that may satisfy the FDIC.
Jeffrey   |     |   Comment #10
Totally falso Doral has much less exposure to PR bonds than Popular
Anonymous   |     |   Comment #11
If you consider the size of Doral with Popular, they have equal exposure to PR bonds.
Anonymous   |     |   Comment #3
There is also an issue regarding a tax refund of 230 million dollars that the Commonwealth owes the bank. I live in MY and have taken advantage of some high CD rates.
Anonymous   |     |   Comment #4
The rate caps are interesting.  Does that also mean that any financial institution that is offering less than a stated for rate for a particular term should be labeled as "less than well capitalized institutions?"
Anonymous   |     |   Comment #9
No.  It's just greed!
Anonymous   |     |   Comment #5
And doralny is offering a 2.5% 5 year CD with a $500 minimum. One of the highest rates available.
Anonymous   |     |   Comment #6
Sorry. That's for 120 months. 10 years
RLB   |     |   Comment #12
My question was, When a bank fails, and is not taken over by another bank, how long does it take to get your money back from the FDIC, lot of misinformation on this subject. Spoke directly to the FDIC, they are available 7 days a week. Spoke to a very knowledgable agent.
He told me that when a bank fails you get an immediate letter from the FDIC, and under normal circumstance they send you a check within 2 days, up to $250,000 total for individual accounts. Trust accounts, take longer as documentation is required from the trust.
 When the failed bank is taken over,by another bank, you have the option of getting your money immediately, or staying with the new bank, at an interest rate to be determined.

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