Pittsburgh Legal Back Talk

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Pittsburgh Legal Newslog: D-Day for Dwelling House

Posted By Cliff Tuttle | June 30, 2009

Posted by Cliff Tuttle (c) 2009

Today, June 30, 2009, is the day that the Office of Thrift Supervision has set for Dwelling House Savings to restore its regulatory capital, $3 Million of it stolen by cyber-thieves through fraudulent ACH (Automated Clearing House) transactions last year and discovered in January. Dwelling House has restored about $1 Million of those purloined funds to its account. Although Dwelling House could probably have raised more than the $2 Million the OTS required in savings and checking deposits, the OTS has required that this capitalization be in the form of funds that cannot be withdrawn. Bank deposits are recorded as liabilities on its balance sheet, since the depositor is “owed” those amounts and can withdraw them in accordance with the terms of the account agreement. By definition, capital required by regulation cannot be withdrawn, but stays with the institution. Most depositary institutions raise capital by issuing stock, but there is no time for that. Moreover, small institutions who convert from mutual to stock are almost always sold to a larger institution at some time in the future for the financial benefit of the stockholders. For the community’s benefit, Dwelling House should remain independent. That means that it must restore solvency without resort to stock sales.

It is very unusual, possibly unheard of, for there to be this degree of public discussion of regulatory compliance by an OTS regulated institution BEFORE it is taken over. But Dwelling House is a highly unusual thrift. It is the oldest minority-owned financial institution in the city and is well-known for promoting home ownership for generations in the Hill District and other black neighborhoods. Dwelling House is a community asset that Pittsburgh cannot afford to lose.

Let us hope and pray that OTS decides that Dwelling House has earned additional time to recover assets through negotiation and even litigation, if necessary.

Pittsburgh Post Gazette, June 28, 2008.

Pittsburgh Tribune Review, June 29, 2009.



CLIFF TUTTLE has been a Pennsylvania lawyer for over 45 years and (inter alia) is a real estate litigator and legal writer. The posts in this blog are intended to provide general information about legal topics of interest to lawyers and consumers with a Pittsburgh and Western Pennsylvania focus. However, this information does not constitute legal advice and there is no lawyer-client relationship created when you read this blog. You are encouraged to leave comments but be aware that posted comments can be read by others. If you wish to contact me in privacy, please use the Contact Form located immediately below this message. I will reply promptly and in strict confidence.

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