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Oklahoma Memories

1984 Bank Failures

2010-11-29

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"The bank's problem started two-and-a-half years ago."

That's the voice of Oklahoma Banking Commissioner Robert Empie in November of 1984 announcing another bank closing in Oklahoma; that a bank in Tecumseh had failed. From the Oklahoma History Center, this is Oklahoma Memories. I'm Michael Dean.

In July 1982 the Penn Square Bank failed. That set off a string of bank failures, not just in Oklahoma but in other states as well. By the fall of 1984 bank failures in Oklahoma were almost a daily occurrence.

The fall of 1984 was a particularly troubling time for Oklahoma banks with four banks falling into failure, Community Bank and Trust in Enid; followed by Security State Bank in Weatherford; then Farmers and Merchants in Tecumseh; and earlier in the summer First Continental Bank and Trust of Del City.

The crisis was being watched by banks and the public around the country. U.S. Senator David Boren reassured state reporters and business leaders that banks and financial institutions were still a safe bet.

"The number of institutions that's been on the trouble list or the watch list is continuing to drop. More and more of the ins that were considered trouble earlier have been restored to health and have been taken off that list, and we're given an update usually every two or three months, more recently about every month, about the number of institutions that are being watched and that's steadily dropping."

In Tulsa, a $72-million lawsuit was filed after three banks there filed for bankruptcy. Their deposits were not insured by the FDIC. Frank Keating, who was running for Congress that fall in 1984, proposed new legislation that would help depositors like those in Tulsa. At a news conference just prior to the election, he was joined by a woman who had lost her money in one of those failed banks.

"This is not intervention as such, this is merely a requirement that's simple common sense. If you presume to take deposits from the general public and invest those deposits, the least you can do to the general public is require that they be insured deposits."

"I think this bill of Frank's would be something that would save other people from what I am going through, and it isn't nice."

While most of the banks that failed in the early 1980s failed because of high-risk energy loans, the Tecumseh bank failed for another reason - a Ponzi scheme that defrauded people out of tens of millions of dollars. Bank Commissioner Robert Empie explained.

"The bank's problem started two-and-a-half years ago at the instance of the Coy Everett affair, who was a young man in the Shawnee area, that perpetrated a Ponzi scheme to the extent of thirty-two million dollars."

Coy Everett, then living in Shawnee, admitted to a fraudulent energy drilling scheme in which returns promised investors were paid with money from seceding investors. The pyramid finally collapsed when Everett was unable to generate money quickly enough to pay those returns.

In the fall of 1984 a total of five banks in Oklahoma failed. The following year, 1985, another 13 Oklahoma financial institutions failed. In the last two years bank failures nationwide have become more frequent; in fact, through last week, a total of 149 banks across this nation have failed this year, and there is still one month left before the year ends.

The Oklahoma Historical Society is working on a major exhibit on banks and financial intuitions in Oklahoma and their role in shaping our state. We'll announce an opening date for that exhibit early next year.

You can learn more about this story and other interesting stories about Oklahoma by visiting the newspaper collection at the Oklahoma History Center, located on NE 23rd Street just east of the state capitol in Oklahoma City, Oklahoma Memories is a production of the Oklahoma History Center, dedicated to the collection, preservation, and sharing of our state's past. I'm Michael Dean.