HISTORIC LANDMARK NOMINATION
Project proposal
I propose the nomination of the United Commercial Bank in San Francisco as a Historical landmark because the bank was the first financial institution to buy a mainland China Bank in the United States. The bank was among the most significant financial institution serving Chinese American under, Tommy Wu, the former United Commercial Bank Chief Executive officer. American Banker Publication honoured Wu at New York’s Pierre hotel for turning a deteriorating San Francisco Chinatown loans and savings into one of the largest financial institutions in America.
The historical relevance of United Commercial Bank in Francisco
The bank promoted American Chinese economy as it facilitated foreign exchange between the two nations. It acquired other banks between 2002 to 2007. In 2002, it acquired Bank of Canton of California in San Francisco and received the first continental banks in Rosemead. In 2007, it acquired the Chinese American Bank in New York City. In 2009, the bank failed, but it merged with East West Bank. In 2010, the merger acquired Washington First International Bank in Seattle, and in 2014 it managed to acquire Metro United bank in San Diego and MetroBank, National Association in 2014.
All these banks, under the control of United Commercial Bank, financed the industrial sector by providing short term, long term and medium loans to industries. The bank also funded the construction of the Golden Gate Bridge that enhanced efficient transportation of Cargo and people from San Francisco Peninsula to the redwoods, Marin, Sonoma, and Napa without the use of ferries or ships.
Research essay
History
United Commercial Bank, established in 1974, was a Chinese bank that operated in the United States, located in San Francisco, California and a branch of UCBH holdings. It was initially known as United Federal Savings and Loan Association but later changed the name to United Savings Bank, and in 1998, it turned to United Commercial Bank. It had branches and operation in Los Angeles, New York, Hong Kong, Stockton, Atlanta, and Shanghai. It also had 2 representative branches in Shenzhen, China and Taipei, Taiwan. Regulators closed the bank in 6th November 2009 and had assets worth 11.2 billion dollars at the time of its closure. The East-West Bank of Pasadena acquired the bank in the same year.
UCBH announced its plans of acquiring the United Commercial Bank with branches located in Flushing, New York and Manhattan, in New York and Development BANK of Shanghai in 2007. The Chinese American Bank received a banking license from the BDB acquisition in China for easier operation and expansion in that Nation. The banking license had full-service offices in Shantou, Hong Kong, and Shanghai in China[1].
The Federal Deposit Insurance Corporation was appointed to be the bank receiver by the California department of the financial institution upon the closure of the United Commercial Bank in 2009. The operations of the bank were merged into East-West bank. Before intervention by the FDIC, United Commercial Bank had a bad reputation because of a financial scandal that led to the restructuring of its upper management[2]. In 2009, UCB announced that its financial reports were untrustworthy because of improper and deliberate actions and understatement of losses by some bank officers to understate the worsening economic conditions. In September the same year, Thomas Wu, the bank’s chief executive, and the chief operating officer, resigned.
Arguments against the significance of UCB
After doing thorough research on the rise and fall of UCB, I realized that it is not worth to be a National Historic site because it’s Chief Executive Officer and other top officials exercised fraudulent behaviours that added a tax burden to the taxpayers and affected the economy of the country[3].
Despite United Commercial Bank overgrowing to the extent of doubling the U.S. stock in size in the eight years from its first public offering, it was declared bankrupt and shuttered in 2009 by the Federal Regulators. According to regulators, Wu’s pursuing of the Chinese overseas bank and acclaim all over the world is the leading cause of the striking collapse. Taxpayers were forced to pay over 3 billion dollars as a result of this failure.
This collapse was worse enough to warrant a criminal prosecution of a top executive of commercial banks that cost the Federal government a bailout of 700 billion dollars of banks. According to UCBH, this failure will cost taxpayers an additional 2.5 billion dollars for deposit insurance. The Securities and Exchange Commission ranked the United States in the top ten bank failures during the United Commercial Bank financial crisis.
The inattention of the Chief Executive Officers, officers, and directors, as well as their quest to become an international player, contributed to the bankruptcy of the bank. Thomas Wu was accused as the leading cause that led the company out of the modest path of being a regional bank holding company by making himself a global player and trying to change the local holding company as a global powerhouse.
Although other researchers argue that Thomas Wu was innocent and was used as a scapegoat for the bankruptcy by authorities, I still believe his poor management led to the fall and collapse of the United Commercial Bank in San Francisco. The Security and Exchange Commission blamed Thomas for the loss of millions while the FDIC barred him from the industry because of being the centre of criminal prosecution.
Thomas Yu and Ebrahim Shabudin were charged with fraud for lying to government regulators and editors about the health of the bank as well as concealing bad loans. The two would be prosecuted for a maximum of 25 years if found guilty. According to prosecutors, the loan portfolio of the bank had illogically ballooned to over eight billion dollars in 2008 as compared to the 4.4 billion dollars loan portfolio in 2004. In 2008, the regulators and prosecutors defaulted the overwhelming numbers of the borrowers of the bank’s loan leading to the imprisonment of Lenny Dykstra, financier due to bankruptcy fraud[4].
The enforcement chief of the security and exchange commission criticized the bank’s executives for embracing deceptive measures to cover up negative news and avoid losses, leaving the FDIC insurance funds and investors a heavy burden of fixing the executive’s deceptions. As a result of financial reporting statement and losses of loans, UCB in San Francisco was closed by Federal Regulators, and East-West Bank in Pasadena immediately purchased it.
The purchase of UCB by East-West bank created the largest American bank focusing on the Chinese-American market. The federal deposit insurance corporation stated that UCB was the fourth-largest bank to fail in 2009. Pasadena’s East-West bank assumed all deposits of a united commercial bank. Thus no depositors lost money because of the bankruptcy of the financial institution[5].
Bibliography
Cole, Rebel A., and Lawrence J. White. “Déjà vu all over again: The causes of U.S. commercial bank failures this time around.” Journal of Financial Services Research 42, no. 1-2 (2012): 5-29
Siliezar, Juan. “Restoring a National Historic Landmark.” (2017).
Fiorentini, Gabriele, Alessandro Galesi, Gabriel Pérez-Quirós, and Enrique Sentana. “The rise and fall of the natural interest rate.” (2018).
Le, Hong Hanh, and Jean-Laurent Viviani. “Predicting bank failure: An improvement by implementing a machine-learning approach to classical financial ratios.” Research in International Business and Finance 44 (2018): 16-25.
[1] Cole, Rebel A., and Lawrence J. White. “Déjà vu all over again: The causes of U.S. commercial bank failures this time around.” Journal of Financial Services Research 42, no. 1-2 (2012): 5-29
[2] Cole, Rebel A., and Lawrence J. White. “Déjà vu all over again: The causes of U.S. commercial bank failures this time around.” Journal of Financial Services Research 42, no. 1-2 (2012): 5-29
[3] Siliezar adversely, Juan. “Restoring a National Historic Landmark.” (2017).
[4] Fiorentini, Gabriele, Alessandro Galesi, Gabriel Pérez-Quirós, and Enrique Santana. “The rise and fall of the natural interest rate.” (2018).
[5] Le, Hong Hanh, and Jean-Laurent Viviani. “Predicting bank failure: An improvement by implementing a machine-learning approach to classical financial ratios.” Research in International Business and Finance 44 (2018): 16-25.