Details emerge in bankers’ trial
By Chris Olwell, The News Herald, Panama City, Fla. | |
McClatchy-Tribune Information Services |
A narrative began to emerge amid all the talk of unsecured debt and generally accepted accounting principals Wednesday during the second day of testimony in the trial of
The three former leaders of Coastal Community Investments, the holding company that owned now-failed
One of the banks had paid dividends that ran afoul with regulators when, in December of 2007, West, Coastal's chief financial officer, and Coastal CEO Dubose sought and obtained a short-term loan of
In cases where RBC had to work closely with borrowers to be repaid and avoid foreclosing on the borrower's collateral, Aland would've expected and preferred to have a face-to-face meeting with the CEO. Aland had to settle for a conference call on
On the call, West and Dubose explained they were exploring a deal for a loan under the
After the call,
Powell had to pause. There's no way Coastal didn't know RBC held the bank as collateral, right?
"He's a smart guy and a chairman of a bank, and I didn't have the information in front of me, so I thought maybe I better check something before I correct him," Powell said.
Powell confirmed that RBC's loan to Coastal was secured by collateral and sent West an email saying as much. The next morning, Powell emailed Aland to say the Coastal deal looked like it was back at square one; the fact that the RBC loan was secured by Coastal stock made Coastal ineligible for the TLGP.
Aland's reaction to the news that Coastal executives didn't know the status of the loan: "Dad-gum! How did they not know the loan was unsecured?"
Not exactly dad-gum, Aland explained, but "I've got ladies in the audience."
"Everyone knew it was secured," Aland said. "It's just not something you'd have to talk about."
Ten minutes later, on a conference call with Aland, Dubose said Center State would lend Coastal the
After the conference call, Powell called Center State to confirm they would lend Coastal the money. Center State didn't indicate the loan was guaranteed by the
Powell called it "an oversight" that RBC records didn't indicate the bank had taken Coastal stock as collateral.
Assistant U.S. Attorney
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