What Will It Take to Save Dwelling House?

Posted By Cliff Tuttle | June 15, 2009

Posted by Cliff Tuttle (c) 2009

The Pittsburgh Post Gazette reported on June 14 that Dwelling House Savings, a Pittsburgh landmark that serves the Hill District, has been told to raise two million dollars in capital by the end of the month or face closure or a regulatory merger.

The intriguing thing about this story is that the situation is not due to loan losses, but to a third party exploiting a weakness of some kind in the on-line security of the bank and drawing off funds. In other words, Dwelling House was the victim of a 21st century hold up. Whether authorities have a line on who committed this techno-heist — it is not an inside job we are assured — they don’t say, as well they shouldn’t.

The PG story states that Dwelling House usually does have greater than normal loan losses. However, these are the result of Dwelling House performing its mission of lending in a community where risks are higher, not because of poor underwriting practices or gimmicky loan products. Because of its higher risk, Dwelling House has traditionally reserved larger amounts on its books to cover such losses and the practice worked well until now.

Isn’t it strange that this is going on at a time when improvident lenders around the country have been rescued by TARP funds, liberally doled out by Treasury to the very no-goodniks who brought the world to the brink of economic collapse. Billions flowed to mega-operations, some of whom appear to serve no one but themselves. Meanwhile, nothing is available for a community bank that has provided countless opportunities for home ownership in one of the poorest neighborhoods in Pittsburgh for a very long time.

What will it take to save Dwelling House? Two Million Dollars in new capital. Two Million is doable. The people in this town will probably buy $2,000,000 worth of Penguins merchandise by the end of the week. Why not put a little of that surplus cash in a savings account or a CD? And deposits at Dwelling House are insured by the FDIC, you know.

Who will replace Dwelling House if it is closed? Who will do its work? Who will serve its customers and community with home loans at competitive rates? If it comes to that, probably no one. And that would be a crime.

CLT

Welcome

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.

Subscribe to our feed